Corporation Bank seeks government nod for Rs 6,000-crore rights issue

State-owned Corporation Bank is in early talks with the government for a Rs 6,000-crore rights issue, Chairman and Managing Director JM Garg said today. The government has a 57 per cent stake in the bank.

“We are mulling the issue. I cannot give details yet as the issue is at a very nascent stage. The issue is to raise capital and preferably we would not like to get funds from the government,” Garg said.

Subject to the government’s approval, Corporation Bank would launch the issue in October-March, Garg said. “We will not be looking at raising capital till at least September. We currently have the potential to increase our credit growth by 25 per cent for the next three-five years,” he said.

The bank is expected to witness a 23 per cent credit growth in 2009-10 (April-March), lower than its initial target of 25 per cent. The bank has projected a capital requirement of Rs 14,000 crore for the next three years. Garg sees an increase in the non-performing assets in October-December, but expects them to stabilise subsequently.