Idbi Bank To Up Authorised Capital To Rs 350 Crore

IDBI Bank has decided to increase its authorised capital from the present Rs 200 crore to Rs 350 crore. The bank will be moving a special resolution to vote at its seventh annual general meeting to be held on August 11, 2001, for the purpose.

The bank will also be passing an enabling blanket resolution to raise Rs 60 crore through one or more public or rights issues, private offerings in domestic or international markets, equity shares and/ or equity shares through depository receipts/ and or convertible bonds to investors (whether residents and/ or non-residents and or strategic investors among others).

According to IDBI Bank's chief financial officer Vinit Kohli, "the bank has to increase its capital to support the growth. The bank is about to ramp up operations and has already invested in new people, new systems and new strategy. The issue would also help to reduce the promoters' stake in the bank."

IDBI's stake in IDBI Bank is presently at around 57 per cent with Sidbi holding another 14 per cent stake. The bank has been under pressure from the Reserve Bank of India (RBI) to bring down the stake of the promoter to 40 per cent.

The bank had also given an employee stock option scheme to the employees of around Rs 14 crore. "After taking the stock option into consideration, the leeway the bank would have for any preferential or any such issue, according to the current authorised capital norms, would be Rs 46 crore. We want flexibility as it would not be possible to go to the shareholders everytime," said Kohli. He, however, added that "nothing specific has been decided. The bank is looking at how to increase the capital."