IDBI Bank examines rights issue

Government-owned IDBI Bank is vetting options like a rights issue or a follow-on public offer (FPO) in the next 12-15 months.

The bank would take a final call on the issue after its audited financial results for the whole year were assessed by March 31, 2011, said CMD M Malla. After the recent government infusion of close to Rs 3,000 crore, the government holding in the bank increased from about 55 per cent to nearly 65 per cent, he added. Subsequently, the bank’s Tier-I capital increased to more than eight per cent.

“We are examining options like rights issue, qualified institutional placement or some other preferential tool to raise capital,” he said. This apart, the bank plans to raise close to $1 billion (Rs 4,664 crore) from the overseas market over the next one year. “Most overseas funds would be raised through private placement. We might also look at raising some loans in foreign currency on a one-to-one basis with banks,” said Malla.

It recently raised close to $350 million (Rs 1,632.4 crore) in foreign currency, through private placement of bonds.

The bank was looking at raising another $350 million in foreign currency through the same route in the short term, said Malla.

In the domestic market, IDBI Bank looks to raise Rs 1,500 crore as Tier-II capital by the end of this financial year. The bank expects a credit and deposit growth of about 20 per cent each by the end of this year.

This apart, IBDI Bank also plans to open representative offices in Singapore and China. It recently opened one full-fledged branch in Dubai.

The bank is also stressing on garnering more Casa (current account and savings account) deposits, which currently stand at close to 15 per cent of the overall bank’s deposits.

The bank has done away with the concept of minimum balance on Casa accounts and has waived off most service charges, other than those pertaining to bounced cheques.