Indian Bank to raise Rs 1000 cr

Indian Bank has decided to raise at least Rs 1,000 crore through its maiden public issue that is slated hit the market by September 2005.

M B N Rao, chairman and managing director Indian Bank said, "The banks capital base as of now stands at Rs 740 crore and we intend to offload around 30 per cent of the government's stake in the Bank. This would amount to Rs 200 crore at face value while the premium charged by the bank should be at least Rs 50 per share."

When asked on the possibility of raising Tier-II capital, Rao said, "The bank raised Rs 300 crore of Tier-II and post IPO, there would be room for another Rs 1,000 crore which would be decided at a later stage."

Rao also said that the intention was to dilute government's stake in stages while the bank would offload 30 per cent in the initial stage which would be followed by another. "We would be able to raise up to 49 per cent," he explained.

The capital raising exercise would be to meet capital adequacy requirements as per Basel II norms. "Basel-II requiring provision for market risk and operational risk would typically require 200 basis points of capital adequacy which as of now stands at 14.14 per cent."

Asked about targets for the financial year 2005-06, he said that the bank was aiming to achieve a 20 per cent growth in business over the last financial year, at Rs 70,000 crore while it hopes to cross the Rs 1 lakh crore mark in 2006-07.

In 2004-05, the bank's business was Rs 53,689 crore, reflecting 18 per cent growth over the previous fiscal.

The bank's gross NPA stood at 3.96 per cent, while net NPA was 1.35 per cent at Rs 240 crore. After incurring losses for several years, the bank had been able to post a net profit of Rs 408.49 crore after wiping out accumulated losses, he added.

Talking about the bank's expansion plan, Rao said, "We intend to open 26 additional branches that would take the number to 1413 by the end of the year.

Talking about the company's subsidiaries, Rao said, "We are on the look out for a partner for our merchant banking arm."

"At present IndBank Merchant Banking Services was involved in fee based activities only and has decided to stop all fund based activities," he explained.