Dhanalakshmi Bank plans follow-on public offer

Dhanalakshmi Bank is planning to float a follow-on public offer for equity shares and a perpetual bond issue to shore up its capital base. The bank may hit the capital market with an equity issue in the current fiscal depending upon the market conditions.

The Kerala-based private sector bank's present capital base plus reserves are just over Rs 100 crore. It needs more capital to support growth in the business and meet the stringent Basel II norms.

The capital adequacy ratio of the bank is 9.75 per cent, above the minimum regulatory requirement of nine per cent.

"At present, the stock market is in a volatile phase so we will watch the situation before finalising the capital raising plans'', VSR Murthy, executive director, said here today.

The bank targets Rs 6,000 crore business in 2006-07 against the Rs 4,223 crore business in 2005-06. Of the total business of Rs 6,000 crore, it aims advance of Rs 2,500 crore (Rs 1,690 crore in 2005-06) and Rs 3,500 crore deposit (Rs 2,533 crore), he said.

For the advances the bank would concentrate on the retail, SME and also put a thrust on exports. The bank has already lend Rs 100 crore as micro credit.

The bank would expand its reach to 10 states and would open 31 new branches in the current financial year. At present, the private sector bank has over 180 branches.