Ratnakar Bank aims to strengthen its capital base in the next couple of months as it prepares for the next phase of growth.
The Kolhapur-based private lender plans to raise up to Rs 300 crore from a group of domestic and international private equity investors to finance its entry into new geographies, expansion of branch network and product portfolio.
The bank has already received an approval from the Foreign Investment Promotion Board (FIPB) to raise funds through preferential equity allotment to foreign institutional investors, foreign residents and non-resident Indians. It has also taken permission to increase the foreign holding in the bank to 55 per cent of the paid-up capital from 43 per cent now. The Reserve Bank of India (RBI) has also cleared the proposal.
"The bank's capital adequacy ratio continues to remain strong (at 18 per cent). It may have decided to augment the capital base as the bank is entering into the next phase of growth. In the next phase of growth, FIPB's clearance for the bank to cross 49 per cent is an enabler for the bank to access foreign institutional investors beside domestic," a senior banker familiar with the development told Business Standard requesting anonymity.
He added that foreign shareholding in the bank may not touch 55 per cent because domestic institutional investors will also participate in the fund raising exercise.
The private lender plans to add new branches in next two months to expand its network to 125 branches. It plans to add 50 odd branches every 12-15 months.
In the banking circles, Ratnakar Bank is often referred to as the NH4 Bank since a majority of its business comes from cities in and around the 1,235-kilometre-long National Highway 4. But as part of its 'NH4 to NH8' strategy the bank is strengthen its presence in the hinterlands of National Highway 8.
The bank has partnered Infosys and is using the software outsourcer's core banking solution Finacle to upgrade its technology platform which will enable expansion of its product suite and help it build scale. "The bank has expanded its products suite and is now looking to build scale. Hence, it decided to raise additional capital," the banker said.
Earlier in February, 2011 Ratnakar Bank had raised over Rs 700 crore from a group of investors that included Housing Development Finance Corporation, Norwest Venture Partners and Cartica Capital.
