Canara Bank to raise tier II capital

Canara Bank aimed to raise between Rs 400 crore and Rs 500 crore of tier-II capital "preferably before the end of the financial year", the bank's chairman and managing director, V P Shetty told reporters here.

The bank was going through a separate credit rating exercise for this and planned to raise the capital before interest rates firmed up further, Shetty said.

Competition was heating up in the market and the pressure was on for resource mobilisation. While the bank had resources to cover its lending targets over the next three to four months, "we wish to prepare ourselves for Basel II", he said.

The bank's capital adequacy ratio (CAR), 12.66 at the end of September 2004, had risen to 13.93 after December. "We would end the year (March 31) with a CAR of about 13," he said.

The bank had commenced various initiatives that would be given more focus this year. In July its centenary year would start. The bank aimed to implement a core banking software and increase its focus on retail banking.

"We are in the final phase of deciding on a vendor and have shortlisted three contenders for the core banking software. In about two weeks we will be closer to taking a decision on this," he said.

In the last two years, there had been much hype on retail banking as it gave a "higher percentage of yield compared with corporate lending".

But in recent times that edge too was slowly disappearing, he said. From this month, a new post of general manager created specifically to focus on retail banking, had come into effect. Among the objectives this internal restructuring was expected to achieve was "focussed attention on delivery (of products)" that would make dealing with the bank a happier experience for the customer.

The bank recently rolled out two new personal loan products and more would be on offer, Shetty said. The implementation of the core banking software will also help use the Internet as a distribution channel, a senior bank official said.

"Right now, we are only providing information on the website about various products, but soon we will be closer to actually selling products on the net," he said.

Canara Bank, which distributes for a fee, life insurance products from Aviva, an insurance company, would soon announce a partnership for distribution of general insurance too. Shetty didn't name the partner. Earlier, Shetty and Kannada film actress Prema inaugurated another automated teller machine the bank had installed.

That took the tally of ATMs of the bank in Bangalore to 66, and 549 in the state. All these initiatives were expected to help boost the bank towards its end-of-the year business target of Rs 1,55,000 crore. In the nine months to December 31, the bank had done business of Rs 1,48,000, he said.