CBoP-LKB merger gets RBI approval

The Reserve Bank of India (RBI) today approved the merger of Kerala-based Lord Krishna Bank (LKB) with Centurion Bank of Punjab (CBoP). The scheme of amalgamation will come into effect from August 29.

The LKB branches will operate as CBoP branches from August 29. The RBI decision comes after the Kerala High Court on August 23 dismissed a petition filed by Umesh V Pai, a shareholder of Kochi-based LKB, seeking to declare the move as illegal.

The merger will add Rs 300 crore to CBoP's balance sheet, which is around Rs 18,480 crore at present, and another 112 branches to its current 279 branches. CBoP plans to add more than 200 branches by December 2007.

CBoP is also planning to raise up to Rs 500 crore through qualified institutional placement route. "We have decided to raise funds to support the bank's growth plans. The bank has ambitious growth plans after the merger of Lord Krishna Bank,'' said Anil Jaggia, chief operating officer, CBoP.

Capital adequacy ratio stood at 10.97 per cent in the first quarter ended June, down from 12.62 per cent a year earlier. The bank will be entering the business of pension fund management and create a subsidiary for the purpose.