Centurion , South Indian Bank to raise capital

Centurion Bank of Punjab (CBoP) and South Indian Bank (SIB) are planning to raise capital over the next 12 months to fund their growth plans. CBoP has received the approval of shareholders to raise up to Rs 500 crore through the qualified institutional placement (QIP) route.

"It's an enabling provision. We have decided to raise funds to support the bank's growth plans. The bank has ambitious growth plans after the merger of Lord Krishna Bank,'' said Anil Jaggia, chief operating officer, CBoP.

Recently, the bank raised Rs 100 crore through a private placement of debt, which qualifies as upper tier II capital.

Currently, the bank is awaiting the clearance from the Reserve Bank of India (RBI) and the Kerala High Court's decision for completing the acquisition of Lord Krishna Bank. "We are open to inorganic growth. After LKB, there are no options,'' added Jaggia.

The bank's capital adequacy ratio at the end of March 31, 2007 stood at 11.1 per cent. In January, the bank had raised around Rs 184 crore by a preferential allotment to India Advantage Fund V through its trustee, the Western India Trustee and Executor Company, and acting through its investment manager, ICICI Venture Funds Management Company.

An old generation private sector bank, South Indian Bank is also exploring various options to raise capital. "The bank's board will meet on July 10 to explore the possibilities of further issuing shares to augment the capital base of the bank. The bank has been growing at 25 per cent year-on-year. To support further credit expansion, we would need to raise capital,'' added V A Joseph, chairman, South Indian Bank.

Banking sources indicate that the bank has kept its options open and could raise around Rs 250 to Rs 300 crore to maintain its capital adequacy ratio in the range of 12 per cent to 13 per cent.