OBC to raise Rs 170 cr capital from LIC

The state-run lender had earlier announced that it has approached the govt & LIC for infusion of equity capital through preferential allotment

State-run lender Oriental Bank of Commerce (OBC) plans to raise Rs 170 crore capital by issuing 20 million shares to LIC (Life Insurance Corporation of India) after the approval from the extraordinary general meeting (EGM) slated on March 29, said a top bank official.

"It will be the equity capital infusion. Due to some changes in RBI guidelines, we don't require much capital now. We will wait and see how the market goes and then we will raise debentures", said Animesh Chauhan , managing director & chief executive officer, OBC.

The bank had earlier announced that it has approached the Government of India and LIC for infusion of equity capital through preferential allotment.

"We are sufficiently capitalized. We have around 11 per cent capital as on December which is adequate to go into next year. However, we are doing some raising from LIC. Our share in the Union government's plans to infuse Rs 25,000 crore in PSBs (public sector banks) in the next fiscal will be helpful to take us forward", he added.

Stressed with rising Non Performing Assets (NPAs), the bank plans to focus on RAM (retail, agriculture and MSMEs) segment.

On a year-on-year basis, the bank's exposure to RAM has registered a growth of 14 per cent. In 2016-17, the bank plans to take it further to 25 per cent. OBC has exposure of about 44 per cent of Rs 15,0000 crore total advances of the bank. Out of 44 per cent, agri sector accounts 16 per cent, 11-12 per cent is retail and the balance is MSMEs.

Chauhan hopes that the steel sector will revive in next six to eight months where it has an exposure of Rs 10000 crore.

To an extent, the bank's NPA is high in Odisha due to our exposure to the steel industries. With government taking steps for revival of the steel units like coal allocations, imposition of minimum import price we are hopeful that the stressed accounts is likely to turn good, he added.