Canara Bank's Rs 3,500-crore QIP issue

The bank awaits govt nod for the same and expects to mop up the money by November

State-run Canara Bank, which has board approval to raise Rs 3,500 crore through a qualified institutional placement (QIP), is awaiting government approval for the same and expects to mop up the money by November.

“We are yet to get approval for QIP from the government. Earlier we had started the QIP process presuming that it will happen before September, but until all approvals are in place, we cannot go ahead. Now, I think it will happen by October end or the first fortnight of November,” Canara Bank Chairman and Managing Director R K Dubey said in Mumbai on Tuesday.

The lender had also secured the approval from Reserve Bank of India and had already appointed merchant bankers for the same. However, Dubey said that now that the approval has been delayed the bank will take a call on merchant bankers later.

The bank has also been planning a follow on public offer in the next financial year.

The lender has also been working on keeping a check on its Non Performing Assets (NPA). But with the slowdown in sale of any fresh NPA to Asset Reconstruction Companies (ARCs), banks are finding it tough to bring the NPA down further.

Dubey said that in this quarter there has not been any sale of NPA to ARCs. He believes that if the sale of NPAs happens then the bank's ratio of gross NPA to gross advances will come down to 2.40 per cent from 2.67 per cent as on 30 June 2014.

"There has not been any sale of NPA in this quarter; we are all in the market including Canara Bank. Deals are going to be finalized in the next 15 days. Till last quarter the sale of NPAs was happening without any hassle but it may not happen like that now. "

The slowdown of sale in NPAs to ARCs has happened after the new regulation that has come in that has mandated that ARCs need to invest at least 15 per cent in securities receipts (SRs) issued by them on the purchase of distressed assets from banks

The lender does not have any immediate plans to raise any tier one capital or infrastructure bonds. The bank's Capital Adequacy Ratio (CAR) as per Basel III norms was at 10.23 per cent as on 30 June 2014 as against 10.63 per cent as on 31 March 2014.

Dubey also said that by December-January there could be a revision in interest rates towards the downside. "If things go the way they are going we could see rates coming down, By December-January definitely there should be downward. It could be 25-50 basis points, not much. It is a signal. By March if inflations goes the way it is going down then it can go down by even 1 per cent or more."