State Bank of Mysore may go public this fiscal

State Bank of Mysore (SBM), the associate bank of State Bank of India (SBI), hopes to tap the capital market with its initial public offer (IPO) by the end of this fiscal year.

The bank aims to strengthen its capital to risk assets ratio (CRAR) as well as provide adequate liquidity to the existing shareholders.

Addressing a press conference, Y Vijayanand, managing director, SBM, said, "We have proposed raising funds through a combination of equity and tier II capital (subordinated debt) after necessary amendments to the State Bank of India Subsidiaries Act are passed." However, the size of the issue is yet to be finalised.

The equity raising was likely to be done either through a rights-cum-public issue or through the initial public offering route (IPO), he added.

Elaborating on this, Vijayanand said that while SBI held 93 per cent of the bank's Rs 36 crore paid-up equity at present, the balance was being held by over 18,000 retail shareholders and institutions.

Though the shares were currently listed at the stock exchanges in Bangalore, Chennai and Mumbai, the shareholders were finding difficulties because of the high face value of shares at Rs 100.

Moreover, SBI Subsidiaries Act did not permit SBM shareholders to hold more than 200 shares, he pointed out.

"We are awaiting for the the SBI Subsidiaries Act to be amended. The amendments would be cleared during the monsoon session of the Parliament. These would enable SBM to tap the capital market," he added.

The amendments to the Act would enable the bank to split the face value of its shares to Rs 10 each from the existing Rs 100 per share and also allow each shareholder to hold more than 200 shares.

SBM plans to add another 30 - 40 branches by the end of this fiscal year, taking the total number of branches to 680.

The bank is also planning to increase its ATM network by adding 100 more to the existing 215 ATMs. Set up at an investment of around Rs 5 crore, these ATMs would be opened in semi-urban and rural areas.

The bank has set a target of Rs 7,000 crore this fiscal year as against Rs 5,600 crore last fiscal year.