Bank of India (BoI) had contingent liabilities of Rs 14,737.37 crore as on March 31, 1996.
This includes liability on account of forward exchange contracts amounting to Rs 9,556.17 crore, guarantees given on behalf of constituents Rs 1,935.44 crore, acceptances, endorsements and other obligations Rs 2,895.40 crore, liabilities for partly paid investments Rs 15.07 crore, claims against the bank not acknowledged as debts Rs 9.60 crore and miscellaneous items Rs 325.69 crore.
However, BoI said that these liabilities pertain to the normal business of the bank and arise out of facilities offered to clients who already avail of the fund based limits.
Market analysts feel that one of the reasons for the issue being priced comparatively low is the risk factors that the bank had to disclose in its prospectus.
BoIs 100 per cent subsidiary, BOI Finance Ltd, has proved to be yet another risk factor for the bank. The subsidiary had accumulated losses of Rs 27.96 crore as on March 31, 1996.
BOI Finance also has disputed income tax liabilities of Rs 12.92 crore and an appeal in this connection is pending before the appellate authorities.
A dispute is pending with Fairgrowth Financial Services Ltd (FFSL) regarding the purchase of PSU bonds for Rs 90 crore as ready forward transactions. This transaction was held illegal by the special court. BOI Finance has filed an appeal against the judgement in the Supreme Court.