Uti Bank Lines Up Rs 300cr Public Iss

UTI Bank plans to come out with its maiden Rs 300-crore public issue in September this year. Capital market conditions may, however, compel the bank to defer the issue by one quarter.

The size of the issue will range between Rs 100 crore and Rs 150 crore at face value. On a face value of Rs 10 per share, the bank hopes to be able to charge a premium of Rs 20 per share.

With this issue, the bank hopes to reduce the promoters share in equity to 40 per cent as per the Reserve Bank of India requirements.

With eight branches, the bank has been performing reasonably well. In 1995-96, the bank registered a net profit of about Rs 11 crore and expects to register at least Rs 25 crore to Rs 30 crore this year.

 

Its aggregate deposits as on January 31, 1997 stood at Rs 1,166 crore while its advances were Rs 642 crore. The bank expects to mobilise nearly Rs 1,300 crore by the end of this financial year.

The bank is also embarking on a branch expansion spree. It will open two more branches in Calcutta. Besides, three more branches are expected to come up soon in Baroda, Delhi and Jamshedpur.

In the next phase of expansion, branches are likely to be opened at Patna, Siliguri, Durgapur and Kochi.

The bank is also in the process of identifying semi-urban locations where branches may be opened to meet the RBI guildelines on this regard.

On the priority lending front, the bank has fallen short of the minimum requirement of 40 per cent. Its priority sector lending has only been 15 per cent of total advances To make up the shortfall, the bank intends to deposit the requisite amount in Nabard and Sidbi bonds.

At the same time, the bank is also devising strategies to meet the requirement through direct lending.

Chief amongst this is an attempt to get into housing finance. Housing finance companies can obtain loan refinance facilities from private banks for advances up to Rs 2 lakh at the bank's prime lending rate plus interest tax. For the bank, such refinance falls in the category of priority sector lending. This method of lending has the big advantage of a higher rate of return than the eight or nine per cent receivable on Nabard or Sidbi bonds.