BoM seeks nod to raise Rs 1,500 crore in 3 years

Public sector Bank of Maharashtra has sought government approval to raise Rs 1,500 crore in three years.

The bank intended to raise Rs 500 crore each year over the next three years, Allen C A Pereira, chairman and managing director, Bank of Maharashtra, said on the sidelines of the Ficci Banking Conclave in Kolkata on Tuesday.

The bank would raise the capital either through a follow-on public offer (FPO), qualified institutional placement (QIP), or a perpetual preferential share issue.

The government currently holds 76 per cent in the bank. If the bank chooses to raise Rs 500 crore through FPO, the government holding would decline by 10 per cent, depending upon the market conditions, Pereira said.

The bank has aimed for a credit growth of 20 per cent and a deposit growth of 18 per cent this financial year, he added.

“Credit and deposit growth has been moderate in the first quarter. We have not gone for aggressive deposit mobilisation as yet. The credit growth has been about 17-18 per cent, and the deposit growth has been around 16-17 per cent. The net interest margin (NIM) has been maintained at 2.43 per cent,” said Pereira.

The bank expects to maintain a NIM of about 2.70 per cent by the end of the financial year.

The bank reduced its benchmark prime lending rate by 25 basis points to 12.25 per cent, with effect from June 6, 2009.

Pereira said that banks might find it difficult to reduce interest rates further, as deposit rates could not be cut below the consumer price index and government savings scheme.

“The banks’ BPLR has reached a point, which at the present is the best combination with deposit rates. Banks do not have the leverage to further reduce the deposits rate,” he said.