Bank of India to strengthen capital base

Bank of India (BoI) plans to focus on ploughing back profits than raising capital by diluting the government stake to strengthen capital base for credit expansion.

If forced to make a choice between diluting government holding and retaining profits, the bank would opt for the second route. This was a far superior way to raise book value and as a consequence market capitalisation, said P T S Narayanasami, chairman and director at the annual general meeting today.

The government holds over 69 per cent stake in the Mumbai-based bank. The bank had obtained shareholders' nod in 2004 to float a follow-on public issue. He indicated that bank would prefer to conserve profit for building net worth and business than give ad hoc fancy dividends.

BoI will also categorise its existing network of 2,800 branches into four categories. First, the resource centres "� branches that will be able to mobilise resources.

Second, profit centres "� branches that will be able to focus on non-interest income which helps to bolster bottom line. Third, priority sector branches "� each branch will have target keeping in mind geography and potential. Finally, district units in region with wide coverage, he said.