Lakshmi Vilas Bank lines up 7:20 rights issue

The Tamil Nadu based Lakshmi Vilas Bank (LVB) has firmed up plans to raise Rs 44.57 crore through a 7:20 rights issue priced at Rs 55 per share. The date for the issue however is yet to be finalised.

The fund raising exercise being undertaken by the bank was primarily for Basel-II compliance and enhancement of capital adequacy for business growth.

"We have decided to raise Tier-I capital at the bank that will help us in achieving Basel-II compliance. Fresh capital will also allow us to meet capital adequacy requirements for new business that we generate at the bank. Given the rate of growth of business at LVB we would require fresh capital soon," A Krishnamoorthy, chairman and chief executive officer of LVB, said.

"Although we are very comfortable with regards to capital adequacy which stands at 13.59 per cent as of now against 13.79 by the beginning of the year," Krishnamoorthy explained.

The capital base of the bank including both Tier-I and Tier-II stands at Rs 289 crore as of March 2004, while its net worth stood at Rs 226 crore.

LVB is a professionally managed bank with the promoters holding only around 1.66 per cent while 80 per cent of the stake is held by the general public. The second largest holding was from private corporate bodies at a total of 10.72 per cent.