Karur Vysya Bank plans rights issue

Karur Vysya Bank (KVB) is planning a rights issue this financial year. It plans to raise Rs 450 crore before May.

Managing Director & CEO, P T Kuppuswamy, told Business Standard the bank was planning to raise Rs 300-325 crore before March. The remaining amount would be raised by May.

KVB’s capital adequacy ratio stands at 14 per cent and the proposed fund-raising will help it sustain growth over the next two years.

The proposed fund-raising plans are to support its business target of Rs 1.25 lakh crore. The bank is targeting business worth Rs 50,000 crore by March 2012.

“For 2016, we have a business target of Rs 1.25 lakh crore, including Rs 75,000 crore deposits and Rs 50,000 crore advances. To support this, we may have to increase our net-owned funds to Rs 4,000-5,000 crore, from Rs 2,100 crore, which includes the proposed Rs 450-crore rights issue”, said Kuppuswamy.

As on March 31 this year, KVB’s total business stood at Rs 32,946.85 crore, an increase of 28.38 per cent year-on-year.

The bank had engaged Boston Consulting Group for business process re-engineering and would work on routes for the proposed fund-raising to increase the net-owned funds, said Kuppuswamy. As for its expansion plans, the bank’s 360 branches would be increased to 450 next year. Currently, it employed 4,400 people and this would double by 2015, he said.