Coastal Local Area Bank plans to up capital base to Rs 15cr via IPO

Coastal Local Area Bank Limited plans to hike its capital base from Rs 5 crore to Rs 15 crore through an initial public offering (IPO) this year.

The bank recorded a net profit of Rs 90 lakh in 2003-04, as compared to Rs 51 lakh in 2002-03.

The bank's chief executive officer V B Raju told Business Standard that the bank is embarking on expanding its branch network. With 11 branches in Krishna, Guntur and West Godavari districts, the bank has planned to open four new branches before June this year.

Raju said the bank achieved 31.24 per cent growth in deposits at Rs 31.63 crore during the year 2003-04 up from Rs 21.10 crore in the previous year.

The advances rose by 5.99 per cent to Rs 19.11 crore from Rs 18.03 crore.

The bank recovered 99.5 per cent of the agricultural loans and is gearing up to install ATMs at its Vijayawada, Guntur and Eluru branches before September this year.

The bank's gross non-performing assets (NPAs) ratio was brought down to a paltry 0.44 per cent for the year ending March 31, 2004. The ratio was 3.01 per cent in 2002-03.

"The net NPA ratio was brought down to zero during the last fiscal from 2.53 per cent in the year before. It is a big and significant success for the bank," Raju said.

He said the RBI had sanctioned licences to the bank to open new branches at Bhimavaram and Tadepalligudem in West Godavari district, Gudivada in Krishna district and Tenali in Guntur district.

The bank is also awaiting the RBI permission to start new branches at Machilipatnam, Kovur, Jaggaiahpet and another place. All the branches of Coastal Bank are fully computerised.

"Fifty-five per cent of the loans advanced by the bank had gone to the agriculture sector. Loans were given to farmers in tie-up with sugar mills, Tobacco Board, state government, palm oil industries and cold storages. The bank gave 15 per cent over and above the 40 per cent target fixed for the priority sector loans by the RBI," the Coastal Local Area Bank chief said.

The bank disbursed loans even in remote rural areas, which were shunned by other banks.

Of the total advances, the trading sector accounted for 10 per cent, housing 10 per cent and five per cent by fish tanks. The bank also, in association with ICICI Bank, IndusInd Bank and ING Vysya Bank, accorded joint loans to farm sector.

Raju said that after he had taken over as the CEO of the bank in August last year, the bank achieved significant growth both in total business and profitability.