Indian Bank to convert equity into Tier II capital

By Staff
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Google Oneindia News

Bangalore, June 21 (UNI) Come September, the State-owned Indian Bank will convert a big chunk of its equity base of Rs 743 crore into Preferential Tier two capital and prepare itself to take a plunge in the capital market with an initial public offer in 2007, its Chairman and Managing Director K C Chakrabarty informed today.

Talking to newspersons here, he said the Bank was looking for converting around Rs 400 crore preferential capital, offering an eight per cent coupon, 15-year term bond. The Bank had sought the permission of the Government for the preferential tier-two capital.

Stating that the Bank was likely to submit its draft prospectus to the SEBI sometime later this year, Dr Chakrabarty said the Bank would go in for a 100 per cent book building process. It was premature to think about the premium of the equity, he added.

After a decade of struggle, the Bank last year posted a record profit of over Rs 500 crore. ''We still have a legacy baggage of over Rs 3,000 crore as outstandings. However we hope to recover Rs 1,500 crore,'' he said.

During the year the bank would recover Rs 500 crore of Non Performing Assets (NPA), he said, adding that the real estate boom coup led with the strict enforcement of rules had led to improvement in recovery of NPA.

Dr Chakrabarty, who was here in connection with the inauguration of couple of branches of the Bank, said the Indian Bank had already issued directions to all its branches to provide loan to farmers at seven per cent as per the Budget pronouncement of the bank.

''We have not fixed any limit,'' he said, adding that the bank expected to increase by 25 per cent its agriculture credit which stood at Rs 4,000 crore last year.

The Bank, which would be entering its centenary year on August 15, aimed at bringing all its branches under the core banking system (CBS) by this year end. Currently over 72 per cent of the Bank's business had been brought under CBS, covering 527 branches.

On the financial inclusion, he said the bank aimed at covering the entire Union Territory of Pondicherry by offering no frills, zero balance accounts. Besides Tamil Nadu, such accounts would be opened in branches in other states also, he added.

UNI VK RG GM1423

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