Indian Bank to raise Rs 1,000 crore in Q3

Will merge two of its three subsidiaries with itself

Chennai based public sector lender will raise Rs 1000 crore in tier-- II capital this year to shore its capital base.

T M Bhasin, chairman and managing director, Indian Bank said, “we will be raising the capital by the way of subordinated tier-II bonds in the third quarter.” The bank made presentation to analysts early this week in Mumbai.

Indian Bank’s capital adequacy ratio (CAR) as of March 2013 was 13.08% with tier – I capital of 10.88%.

The proposed issue of bonds have been rated AAA by rating agencies – CRISIL and CARE.  In addition the bank already has secured permission government to dilute its stake further by 10% however will not tap that option as of now.  Currently government holds 80% stake in the bank.

The lender would also merge two of its three subsidiaries – Indbank Housing and Indfund Management with itself.

“We are going through the procedure and it will take its own time” said Rajeev Rishi, executive director, Indian Bank who is also the chairman of these subsidiaries.

“Company is engaged in recovery of dues from various categories of borrowers and applying the same for reduction of public deposits” says the notice displayed on the Indbank Housing's website.

“Indbank merchant this year has been shade better than previous year but not what we were expecting,” Rishi said adding “we have plans for the company and hopefully in the years coming by it should show some improvement.”

The bank also expects promoters of Varun Industries to bring the ‘critical amount’ to take its restructuring proposal forward by June end.

Bhasin said, “we had a meeting with them and they have asked for a month’s time…so I think it should be done by June end.” The lender expects promoters to bring Rs 17-18 crore to take the CDR proposal forward.

Indian Bank is the lead bank of the consortium of eight lenders to Varun Industries with an exposure of Rs 400 crore. Total exposure to Varun Industries is Rs 1650 crore.

Lenders have already referred restructuring of Varun Industries through corporate debt restructuring (CDR) cell however the debt hasn’t been restructured yet and continues to be a non performing asset at least for Indian Bank.