The Global Trust Bank is planning to increase its Tier II capital to raise the capital adequacy ratio to 11 per cent.
At present the ratio, at 10.16 per cent, is higher than the prescribed norm of 8 per cent but the bank management prefers to increase it to 11 per cent which will be closer to our comfort levels, Global Trust chairman Ramesh Gelli told Business Standard.
To begin with, the bank is likely to issue unsecured subordinated bonds to aggregate Rs 20 crore. Further tranches are not ruled out for this financial year although chances are not very high, says Gelli.
It may be recalled that the bank had issued such bonds in December last year for a similar amount. This year, it will be done by October itself, Gelli said. These bonds had a coupon rate of 17.5 per cent and the bank is confident of getting funds a lot cheaper this time around.
Such capital infusion has become necessary as the bank does not believe in curtailing business just to have a comfortable capital adequacy ratio.
In the first quarter of the current year, the bank has seen its deposit increase by nine per cent and credit rise by six per cent. In absolute terms this works out to Rs 2500 crore and Rs 1500 crore respectively.
The nine new private sector banks put together have garnered about Rs 7000 crore as incremental deposits from the total pool of Rs 65,000 crore that came into the banking system as a whole during the period under review.
Global Trust, says Gelli, will focus on the southern and western markets for its business. In the other two regions our presence will be more strategic, he added.
Gelli was in the city to inaugurate the banks fourth branch.
He said the bank will be fighting it out for a piece of the Rs 12582-crore deposit market the city represents.
Global Trust already has 28 branches throughout the country and plans to take this figure up to 40 by March 1998.
