Capital Local Area Bank eyes IPO in 2017

It has bagged licence for small finance bank

Capital Local Area Bank, a Jalandhar-based entity which got a licence for a small finance bank, plans to make a public offer of equity in 2017.

With 39 active branches in five districts of Punjab, it expects to start operations in April 2016 as a small finance bank (SFB), though the central bank had granted 18 months from the grant of a licence.

Sarvjit Singh Samra, managing director, said they would tap the 1,000-odd existing shareholders with a rights issue to raise Rs 18 crore. “This will increase our capital base to Rs 120-125 crore.”

Its capital adequacy at end-March 2015 was 15.22 per cent. The bank has a four-year plan (2016-2020) to reach a business mix of Rs 7,000 crore, with a deposit base of Rs 4,200 crore and advances of Rs 2,800 crore.  Each year, the bank will raise capital worth Rs 15-20 crore through hybrid bonds, Samra said.

It expects to end FY16 with business— advances plus deposits— of Rs 3,000 crore.  For 2014-15, this was Rs 2,436 crore, with a loan portfolio of Rs 929 crore and deposits of Rs 1,506 crore. It posted a net profit of Rs 14.2 crore on total income of Rs 172.7 crore in 2014-15.

As an SFB, it will cover Punjab and Chandigarh in the first year of operations. In the next phase, the plan is to enter Haryana and a part of Rajasthan, said Samra. The staff of 600 should cross 1,000 in the first year of activity.