Vijaya plans to raise tier-II capital in December

Vijaya Bank may raise Tier II capital after December this year, if credit disbursal picks up as per expectations.

"The bank might look into the option of raising Tier II capital of Rs 200-250 crore after December 2005. But this will be solely guided by the bank's credit expansion," said M S Kapur, chairman and managing director.

"We have set a business target of Rs 50,000 crore against last year's performance of Rs 41,000 crore," he added.

The bank is expected to register a total business of Rs 50,000 crore in 2005-06, of which Rs 31,000 would be deposits and the remaining Rs 19,000 crore as advances, Kapur said.

The CMD further said all the legal formalities pertaining to the merger of Vibank Housing Finance (VHFL) with the parent is over and the merger was under process.

"VHFL has Rs 400 crore assets and its 15 branches were being merged with the parent, Vijaya Bank," Kapur said.

Going ahead with its expansion plan, the bank has already applied to the Reserve Bank of India for 18 more branches, that would take the total number of branches to more than 1,000, he added.

Kapur also noted that currently the bank was training its staff for its life insurance venture. "We hold 12 per cent share in the life venture to be floated shortly jointly with the Punjab National Bank, Principal Financial Group, US. The paid-up capital of the venture would be Rs 110 crore," said Kapur. He further said retail lending was expected to account for 50 per cent of the credit portfolio.

"Last year, retail credit was 38 per cent and housing loan was around 18 per cent of our credit portfolio. The retail share is expected to be 50 per cent of the portfolio this year," he said. The capital adequacy ratio was more than 12 per cent with non-performing assets being less than 1 per cent as on March, 2005, he said.

About the latest visit of the finance minister to the bank, Kapur said, "The finance minister has noted that the board should not be a fault finding agent, but should support the management to run the bank more efficiently."