UTI Rs 2000 cr follow-on issue likely

UTI Bank is likely to raise around Rs 2,000 crore through a follow-on equity issue in 2007-08 to shore up its tier I capital.

"To support growth and meet the capital requirements under the new Basel II structure, we would raise around Rs 2,000 crore inclusive of the premium by way of an equity issue in 2007-08. However, the board has yet to decide whether this would be overseas or a domestic issue,'' said Asok Kumar, executive director, UTI Bank.

The bank also has headroom to raise capital through the issuance of tier II bonds. The bank's capital adequacy ratio stood at 11.57 per cent with tier I capital at 6.42 per cent.

Under the revised draft guidelines on capital adequacy framework, the Reserve Bank of India has prescribed a tier I floor of 6 per cent within the overall 9 per cent capital adequacy requirement.