Bank of Maharashtra's public offering likely in 2nd half of FY16

Bank of Maharashtra would look at equity offering only in the second half of the next financial year (FY16) to get better valuation, the Pune-based public sector lender’s Chairman and Managing Director S Muhnot said.

The bank’s capital adequacy is comfortable at 11.7 per cent and given that its stock is trading at a discount to book value now, this is not an appropriate time to come with an offering, Muhnot told reporters here on Monday after launching the lender’s new mobile banking application, MahaMobile.

The Bank of Maharashtra stock closed flat at Rs 41 a share on the BSE on Monday. The bank has already raised Tier-I capital of Rs 1,000 crore last month through Basel-III-compliant additional Tier-I bonds. It also has room to issue Basel-III-compliant Tier-II bonds. With falling interest rates, the bank would be able to place bonds at a relatively lower coupon rate.

The bank expects the Centre to infuse an additional equity capital by the end of this financial year. The lender had presented an estimate of Rs 800 crore to the Government of India, Muhnot said. The government already holds a 79.8 per cent stake in the bank as of December 2014.

According to Muhnot, the bank’s focus is to improve its performance on financial parameters. The economic upturn and investment demand could push credit growth, leading to better recoveries of dues. This is why the lender looks at bringing out an equity offering only in the second half of 2015-16.

MahaMobile will enable customers to view their deposit and loan accounts, do fund transfers and bill payments, and raise requests for a variety of services requests on their mobile phones.

The bank has 18 million customers, out of which 350,000 customers are active on the internet. It expects at least 60 per cent of customers to use mobile banking applications in the next two-three years, helping the bank save transaction costs, Muhnot said.