Repco Bank looks at RBI policy to operate as commercial bank

Chennai-based Repco Bank, a co-operative bank under the Union Ministry of Home, is waiting for the Reserve Bank of India (RBI) to come up with licensing policy, to join the group of commercial banks in the country. The bank is expecting an infusion of around Rs 100 crore in the next three years, to double its business from the present Rs 7,061 crore to Rs 15,000 crore by 2014-15, said a senior executive from the bank.

The bank was incorporated as The Repatriates Co-operative Finance and Development Bank in 1969 by the Government of India with the main objective of rehabilitating repatriates from Burma and Sri Lanka. The Board of Directors appointed by Centre governs the operations of the institution under administrative control of the Ministry of Home Affairs, under special powers conferred in the byelaws. It would look at opportunities to work as a commercial bank under the RBI regulations, though the administrative control would remain with the Ministry of Home, said R Varadarajan, chief executive and managing director of Repco Bank.

“We are looking at the RBI’s licensing policy for further proceedings. We are not a forex dealer now and licensing will give us the powers to deal with forex,” said Varadarajan. He added, presently the ATMs of Repco Bank are not shared and the licensing would open up the possibilities of sharing ATMs and similar transactions with other scheduled commercial banks.

Around 82 per cent of the Rs 97 crore paid up capital is held by the Government of India, while 11 per cent is with repatriates and the rest of the 7 per cent is from the state governments of the four southern states.

It has posted a 35 per cent growth in total business for fiscal-ended March 31, 2012, at Rs 7,061 crore as against Rs 5,200 crore registered during the previous fiscal year. The profit after tax increased 40 per cent during fiscal 2011-12 at Rs 73 crore as against Rs 52 crore for the previous fiscal year, said Varadarajan.

The bank has submitted a three-year plan which would require a capital infusion of Rs 100 crore from the existing stake holders, especially from the central government. The target is to achieve Rs 15,000 crore business in the next three years.

“We would reach the target easily if we stick to the present growth rate of 35 per cent for the next three years. We expect to reach Rs 9,500 crore business in the present fiscal,” said Varadarajan. The bank is growing double the pace of the industry, he added.

The loan disbursement last fiscal was around Rs 1,400 crore and it is aiming at a disbursement of Rs 2,000 crore this fiscal. With around 75 branches at present, it is planning to open around 10 new branches, of which seven would be in Tamil Nadu. “In three years’ we want to expand the number of branches to 120,” he said.

Repco Home Finance Ltd, a subsidiary of the bank, is in the process of listing the company through an Initial Public Offering (IPO). It has submitted a draft red herring prospectus in September, 2011, to raise around Rs 200 crore, and is awaiting the regulator’s nod for further proceedings.