Allahabad Bank Postpones Rs 83 Crore Ipo

This would be second occasion where the bank has postponed its issue, which was originally scheduled for June this year. Thereafter, top officials of the bank along with the officials of the Reserve Bank of India decided to postpone it to September.

According to Allahabad Bank chairman and managing director B Samal, the situation on the bourses is not suitable for a public issue.

"The markets are too dull, mostly for banking stocks. We have decided to postpone it till November. Moreover, our capital adequacy ratio is comfortable and we afford the delay," Samal said.

The government would be diluting 25 per cent of its stake in Allahabad Bank, the oldest bank of the country, through this public issue. At present, the capital adequacy ratio of the bank is 11.51 per cent, which is well above RBI minimum prescribed limit of nine per cent.

 

The apex bank also agreed to Allahabad Bank request of offering the Rs 83-crore public issue would be at par. RBI officials felt that the bank can charge some premium but they changed their decision.

Banking sources said that Allahabad Bank has already expressed its unwillingness of floating the issue to the central bank. Moreover, it is yet to make a formal application to the Securities & Exchange Board of India.

Bank officials are also concerned over the fact that three more nationalised banks have their initial public offering lined up. The banks are Indian Overseas Bank, Punjab National Bank and Andhra Bank.

Banking sources said: "All the four cannot wait for long. Some of them will have to go for the issue. However, the market is not suitable to absorb so many new banking scrips."

For the year ended March 31, 2000, deposits of Allahabad Bank went up to Rs 17,642 crore from Rs 15,510 crore, registering a growth of 13.7 per cent. Similarly, advances also increased to Rs 8,221 crore from Rs 7,161 crore, marking a growth of 14.8 per cent. The bank registered a net profit of Rs 69.33 crore.