Corpn Bank Plans To Spread Network Via Lic Offices

Mangalore-based Corporation Bank has drawn up plans to increase its network of branches, extension counters and ATMs by 100. These new units will be opened at the Life Insurance Corporation of India (LIC) premises, especially in north India as the bank has a fairly strong presence in the South.

K Cherian Varghese, chairman and managing director of the bank, said: "This route for extending our reach by offering various retail delivery channels across the country is in line with the June 6 memorandum of understanding signed with the LIC. The MoU envisages strategic alliance seeks to draw on each other's strengths."

 

The bank also has plans to set up 250 ATMs by March 2002 at an average cost of Rs 20 lakh per ATM, Varghese said, and added that 125 ATMs will be up, and running, by December 2001. The total expenditure for the ATM project works out to Rs 50 crore.

The bank will shortly be appointing a valuer for its primary dealership (PD) subsidiary, Corpbank Securities, so that LIC can pick up a stake in it as per the terms of the MoU. The PD subsidiary has a paid up capital of Rs 100 crore.

The bank plans to double its housing loan portfolio from Rs 400 crore as on September 30, 2001, to Rs 800 crore by the end of this fiscal. It also intends to strengthen the housing finance arm, Corpbank Housing Ltd, by injecting Rs 5 crore to take its total capital-base to Rs 15 crore.

Meanwhile, the bank has received Rs 459. 42 crore from the LIC for allotting 2.34 crore shares at Rs 196 per share to the latter on preferential basis. The LIC's purchase comes comes in the wake of it receiving the approval from Insurance and Regulatory Development Authority for hiking the stake in the bank.

With this capital infusion, the bank's capital adequacy ratio (CAR) is likely go up to 17.50 per cent compared with 13.50 per cent as on September 30, 2001. Varghese said the bank would deploy these proceeds for developing treasury operations and extending credit. With this preferential issue, LIC's stake in the bank has gone up from 12.32 per cent to 27 per cent, while the government's stake has come down from 68.33 per cent to 57.17 per cent.

Out of the Rs 459.42 crore received by the bank, Rs 23.44 crore has gone towards its share capital account and Rs 435.98 crore towards its share premium account. The bank's share capital now stands at Rs 143.44 crore (Rs 120 crore), while the net worth goes up to Rs 1,969 crore (Rs 1,509 crore).