Central Bank of India to raise Rs 500-600 crore

"We are examining all options for raising funds. It may be a basket of products like hybrid or subordinate bonds, which could be exercised to raise the required capital to meet the capital adequacy ratio (CAR) under the Basel-II norms," said HA Daruwalla, Chairman and Managing Director, Central Bank of India, in the sidelines of FICCI Banking Conclave 2008.

 

The bank is also planning to apply to the ministry for the follow-on public offer (FPO).

"We will complete one year of the IPO only in August this year and once that is complete we would definitely like to go to the ministry for the FPO as the response we got for our IPO was overwhelming," she added.

The government holds 80 per cent of the stake in the bank and it was listed on the stock exchanges on August 21 last year.

Currently, the capital adequacy ratio of the bank is 10.42 per cent and is aiming at least  11 per cent in FY09.

"Our CAR got a hit mainly on the account of the AS-15 accounting norms where we made a provision of Rs 875 crore, otherwise it would have been 11 per cent by now. Ideally we would like a CAR of 12 per cent, but our target is to have a CAR in excess of 11 per cent by 31 March, 2009," Daruwalla said.

Meanwhile, Daruwalla admitted that there has been a slowdown in the credit growth in the first quarter of the current fiscal, saying, "There has been some slowdown in the advances growth in the current quarter."

Consequently the bank has revised the advance growth target downwards for the 2008-09 to 20 per cent from 27 per cent announced during the financial results.

"We expect the demand to come from industry in the next few quarters. We are targeting a 20 per cent growth in advances and a 23 per cent deposit growth for this fiscal," she added.

Last year the bank reported a credit growth of 38 per cent and the deposits grew by 32 per cent.

Speaking about the possible hike in the PLR, Daruwalla said that the asset and liability committee would be meeting shortly to decide on it.

"Our Alco is meeting on Saturday. We might increase it a little but I still feel our PLR at 13 per cent is comfortable," she said.