BoB to get Rs 775-cr capital by Mar

The government has agreed to infuse fresh capital of Rs 775 crore in Bank of Baroda (BoB) by the end of March 2012, Chairman and Managing Director M D Mallya said on Monday.

"We have received a consent letter from the government for infusing fresh capital before the end of March 2012," he said.

The bank had received Rs 2,500 crore from the government in March 2011, and the government's stake in the bank had gone up from 53 per cent to 57 per cent. With the infusion of another Rs 775 crore this quarter, the stake would rise to 58 per cent.

BoB's capital adequacy ratio stands at 14 per cent and with the capital infusion and factoring of its profits during the first two quarters of this financial year, its Tier-I capital would rise to 10 per cent, Mallya said.

The infusion would help the bank expand its business. The bank’s total business crossed the Rs 6-lakh crore mark during the third quarter and stood at Rs 6,10,000 crore, Mallya told reporters after inaugurating the bank’s new regional office building here.

Despite muted credit demand in recent months, BoB expects to register credit growth of around 19-20 per cent, higher than the industry benchmark for the current financial year. “For the current financial year, I am confident the industry would grow by about 17-18 per cent. BoB has always been growing higher than the industry, and this year too, we would grow by about 20 per cent. We will continue to retain our leadership position in terms of growth this financial year, too,” Mallya said.

Lately, the demand for credit has been muted, especially since corporates are going slow on expansions and new projects. They are, however, continuing with the implementation of ongoing projects. Therefore, fresh sanctions of credit have been held up in the recent days, he added.

“We expect a change in the coming days. Going by the November IIP data, there is some sort of a revival in industrial production. If inflation moderates further and positive policy steps are announced, we can expect a rebound in the coming days,” Mallya said. He, however, did not comment on the central bank’s January 24 policy review. “We are all awaiting the credit policy announcement from RBI (Reserve Bank of India on January 24, and will take a call on interest rates later.”

Mallya said the bank would open 13 foreign branches by June 2012 to increase the number of the bank’s foreign branches to 100. It would open a new branch in Australia, its second branch in New Zealand and seek to expand in the UAE and Malaysia.