Boi Shareholders Okay Reduction Of Paid-Up Capital

The shareholders of Bank of India (BoI) have unanimously approved reduction in the paid-up equity capital of the bank by returning equity to the extent of Rs 300 crore held by the Union government.

This move will see the Centre's stake get diluted to 51 per cent from the present 76 per cent.

Speaking at the fifth annual general meeting today, chairman and managing director of the bank, K V Krishnamurthy, said: "Once the shareholders' resolution for reducing the paid-up capital gets the nod from the Union government, Reserve Bank of India and other statutory authorities, it will result in a substantial increase in shareholder value through enhancement of book value and earnings per share."

 

The paid-up equity capital of the bank, as on March 31, 2001, stood at Rs 638.41 crore. Of this, the Union government's accounts for Rs 489 crore (76.53 per cent).

Krishnamurthy said, "Even after the capital restructuring exercise, our capital adequacy ratio will be around 12 per cent. The public shareholding in the bank will arithmetically go up to 49 per cent from 24 per cent."

To a shareholder's query, whether the bank would be able to recover the Rs 134 crore that it lost on account of the pay-order crisis, he said the Union government was working out a package for reviving the Madhavpura Mercantile Co-operative Bank and the BoI's claim was included in the package.

During 2000-01, the bank had witnessed fresh slippages to the tune of Rs 911 crore (Rs 1,304 crore in 1999-2000), which was mainly on account of delinquencies in the iron, steel and textiles sectors.

As per corporate plan for this fiscal, the bank is expecting to post an operating profit of Rs 1,450 crore compared with Rs 1,102 crore (pre-VRS) in the previous financial year.

The bank has also drawn up plans to expand its network of foreign branches to China and Vietnam.

Taking on the film financing, Krishnamurthy said, he expects the bank to disburse around Rs 50 crore in the current fiscal.

Krishnamurthy said the bank was setting up around 250 automated teller machines (ATMs) in major cities across the country.

He added that the bank would outsource the infrastructure required for the ATM network on a lease basis from an agency and thus will be incurring almost no cost for it.