Syndicate Bank plans to raise Rs 1,100 cr via QIP

Will lead to dilution in govt's stake to around 62% from 67.4% now

Syndicate Bank plans to raise Rs 1,100 crore through a qualified institutional placement (QIP) in the current financial year, its Chairman and Managing Director Sudhir Kumar Jain said on Tuesday. The fund-raising programme will lead to a dilution in the government's stake in the bank to around 62 per cent from 67.4 per cent now.

“It is not that we need capital immediately. But we need to raise money in anticipation of our long-term growth. We expect the annual average growth in our advances to be around 19 per cent for next five years. Hence, we have written to the government requesting permission to raise capital via QIP,” Jain told reporters on the sidelines of a banking seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

He remained confident that the bank will be able to raise funds during the current financial year. Syndicate Bank's capital adequacy ratio was 11.41 per cent according to Basel-III norms at the end of March, 2014.

Separately, Jain said the bank witnessed fresh slippages in its small loan accounts during the first three months of 2014-15.

As a result, the state-run lender's gross non-performing asset (NPA) ratio might deteriorate a tad. The bank's gross NPA ratio was 2.62 per cent at the end of the last financial year.

“Our large corporate loan accounts are performing well but there have been some slippages in small accounts. Hence, our gross NPA ratio may inch up a bit. But we have stepped up our recovery efforts and expect our asset quality to improve from September onwards,” Jain said.

In the April-June period, Syndicate Bank sold NPAs worth Rs 200 crore to asset reconstruction companies. In addition, it also sold a special mention account (SMA) worth Rs 750 crore. The bank aims to sell Rs 1,500 crore of bad loans in the next nine months.