Bank of India to raise Rs 1600 cr

Bank of India will raise Rs 1,600 crore comprising upper Tier-II subordinate debt and lower Tier-I in the current financial year, M Balachandran, chairman and managing director, said today.

The issue will improve the bank's capital adequacy ratio to 11.25 per cent by March 2007 from 10.75 per cent in 2005-06.

"Out of the Rs 1,600 crore, we will raise Rs 200 crore of subordinate debt through private placement in the next few days," Balachandran said.

The state-owned bank has no plans of tapping the equity market in the near future. "Though we have a mandate from the shareholders, we would not like to go for equity capital in near future. We would like to keep that as a last resort," Balachandran said.

He was addressing shareholders at the annual general meeting today. Balachandran assured shareholders about the bank was moving towards Basel II compliance.

"We are conscious of Basel II requirements. Even after taking into account Basel II needs and additional risk weight, we will have a capital adequacy ratio of 11.25 per cent by March end," Balachandran said.

He agreed that the consolidation in the banking sector will improve banks' efficiency but said that certain statutory norms will have to be changed for allowing consolidation.

"We would like to grow organically and inorganically within and outside the country," Balachandran said.