State-owned lender lender Punjab and Sind Bank today said it expects its capital adequacy ratio (CAR) to increase to over 15 per cent after raising Rs 475 crore through its initial public offer (IPO), set to open on December 13.
The main object of the bank's public issue is to augment its capital base to meet its capital adequacy norms for future capital requirements, as per bank's Red Herring Prospectus.
"Our CAR will jump to over 15 per cent after raising the IPO," a senior official of PSB said here today on the condition of anonymity.
CAR is a measure to determine the capacity of the bank to provide cushion in case of potential losses. It is expressed as a percentage of a bank's risk-weighted credit exposures.
The bank's CAR stood at 13.04 per cent comprising 7.98 per cent (Tier-I) and 5.06 per cent (Tier-II) as on September 30 this year. As per RBI norms, a bank has to maintain a minimum CAR of 9 per cent of risk-weighted assets. PSB's risk weighted assets was Rs 31,916.70 crore during September-end.
"Post the IPO, the equity capital base of the bank will also increase to Rs 223 crore from current level of Rs 183 crore," he said.
PSB, which was founded in Amritsar in 1908, plans to raise Rs 475 crore through issue of fresh equity of 4 crore shares priced at Rs 113-120 per equity share.
PSB has seen phenomenal growth in its deposits growth at 28.24 per cent and 36.24 per cent in advances, respectively. Bank's total deposits stood at Rs 52,945 crore and advances at Rs 35,896 crore in the current fiscal.
PSB is the only unlisted nationalised bank.
