OBC seeks Rs 1,600-cr capital support from government

Fund will be utilised for expanding business of the bank

State-run Oriental Bank of Commerce has sought Rs 1,600 crore from the government to enhance its capital base.

 

"We have put in a request for capital infusion of Rs 1,600 crore during the current fiscal," OBC Chairman and Managing Director S L Bansal said.

 

The fund would be utilised for expanding business of the bank, he added.

 

Earlier, the bank had received a capital support of Rs 1,740 crore as part of recapitalisation package in March 2011.

 

The fund was raised through preferential allotment of about 4 crore equity shares of Rs 10 each for cash at an issue price of Rs 422.11 per unit.

 

As a result, government's holding in the bank rose from 51.09% to 58%.

 

It has already been announced that the public sector banks will get Rs 14,000 crore additional capital from the government during the current fiscal.

 

"Before end of March 2013, we should provide Rs 12,517 crore to infuse additional capital into 13 public sector banks. In 2013-14, I propose to provide a further amount of Rs 14,000 crore for capital infusion," Finance Minister P Chidambaram had said in his Budget speech.

 

"We should ensure that public sector banks always meet Basel III regulations as they come into force in a phased manner," he had said while presenting the Union Budget 2013-14.

 

Implementation of Basel III capital regulations envisages enhancing requirement of core equity capital by banks due to higher capital ratios. The Basel III capital ratios will be fully phased in as on March 31, 2018.

 

During the first quarter ended June 30, 2013, OBC reported a 9.7% decline in net profit at Rs 353.38 crore as compared to Rs 391.42 crore in the same quarter of previous fiscal.

 

Total income increased 11.93% to Rs 5,255.70 crore from Rs 4,695.5 crore in the corresponding year ago period.

 

Gross non-performing assets (NPAs) as a percentage of total advances rose to 3.36% from 2.97%. Net NPAs also went up to 2.34% from 2.05%.