Uti Bank Paid-Up Capital To Go Up By 33%

UTI Bank is weighing the possibility of getting its additional equity through foreign direct investment (FDI) route. The bank negotiating with some foreign funds for the process. A clear picture on the bank's proposal to dilute its equity through preferential offer is expected to emerge in 6-8 weeks.

P J Nayak, chairman & managing director (CMD) of the bank, said today the bank's equity was likely to go up by another one-third of the existing paid-up capital of Rs 131 crore. This is to ensure that the UTI's holding in the banking arm will come down to 40 per cent from 60 per cent as per the mandatory requirement stipulated by the Reserve Bank of India (RBI), Nayak said. The bank also needs capital to meet the capital adequacy requirements for the business expansion, he added.

 

Nayak is here to formally inaugurate the electronic channel devised by the bank for the revenue collection of the commercial tax department of the Andhra Pradesh government, a first-of-its-kind initiative by a bank for a state government department in the country.

The system will ensure the government department to realise its cheques in a day or two as against two weeks it is taking at present. The bank is also negotiating with two other state governments to offer the similar service. "If it is successful, we can extend it to other departments and state governments," Nayak said.

He ruled out the possibility of any acquisition or merger initiative by UTI Bank in the current year. "We are clearly looking at organic growth now," he said. He indicated that the bank would witness similar growth achieved in the last fiscal, in the current year too.

"It may not be proper to give any profit projections. Our bottomline grew by 69 per cent last year. We hope to grow in a similar fashion," Nayak said.

He also said the bank's ATM network would go up to 500 by the end of this fiscal from the current figure of 341. At present, UTI Bank has the second largest network of ATM's, first being the ICICI Bank. Nayak said the ATMs were helping the bank in terms of customer acquisition strategy and getting low cost savings bank deposits.