Indian Bank is planning to raise around Rs 1,000 crore through Tier-II capital bonds, to augment its Tier-II capital. The bank also said it got nod from the bank’s Board to issue offer perpetual bonds or debentures to financial institutional investors (FIIs).
Meanwhile, for the first time in the history of the bank, net profit crossed Rs 500 crore mark to touch Rs 526 crore for the third quarter as against Rs 491 crore in the same quarter last financial year, an increase of around seven per cent.
Speaking to reporters after announcing Bank’s third quarter results in Chennai on Monday, Chairman and Managing Director T M Bhasin said “the fund raising will be through tier II capital bonds. We are waiting for a good rate of interest and we are expecting by March this year and we will be ready to issue the bonds”. The proposed fund raising will help the bank to lend around Rs 6,000 crore additional disbursement.
Total income of the bank rose by 32.8 per cent to Rs 3,505 crore from Rs 2,641 crore. Net interest income rose by 12.8 per cent to Rs 1,170 crore, from Rs 1,038 crore. Gross NPA of was at 1.35 per cent and the net NPA stood at 0.80 per cent. Restructured loan stood at Rs 7,859 crore, out of which it had recovered and closed accounts amounting to Rs 2,286 crore, said Bhasin.
It may be noted, the bank has postponed its follow-on public offer (FPO), stating the market is not conducive and asked the government and Reserve Bank of India’s nod for the perpetual bond as an option at the time of IPO request itself.
“We are not in a hurry for FPO, since we are adequately capitalised and bank’s Tier I capital is at 9.55 per cent by end-December 2011, which is well above the Basel II requirement of eight per cent and we have headroom available to raise Rs 6,195 crore Tier II capital,” said Bhasin.
The Bank is also planning to convert Rs 400 crore perpetual non-convertible preference shares (PNCPS) into equity. “The request is under consideration by the Union Government and RBI,” said Bhasin. It may be noted, Government of India is the single largest holder in the bank with 80 per cent equity holding.
