Indian Bank expects to raise Rs 1,500 crore through a follow-on public issue, which is likely to hit the market in July. The Draft Red Herring Prospectus for the issue would be filed probably in May, after the current year's financial results are audited, Indian Bank's Chairman and Managing Director, Mr T. M. Bhasin, said.
Speaking to presspersons after signing an MoU with Bajaj Auto under which the bank would finance the purchase of Bajaj's three-wheelers, Mr Bhasin said the issue would shore up the bank's tier-I (owned capital, as opposed to capital constituted by long-term loans); the capital adequacy ratio was at 12.9 per cent as on September 30, 2010.
Indian Bank is 80-per cent owned by the Government of India and, hence, a 10 per cent dilution will not threaten the public sector character of the bank.
Indian Bank's total business includes deposits of about Rs 98,000 crore and advances of Rs 70,000 crore.
Mr Bhasin said the MoU with Bajaj Auto paves the way for the bank to lend for three-wheeler purchases. The loans count for meeting priority sector obligations while being safe for the bank, because three-fourths of each loan is guaranteed by the Credit Guarantee Fund Trust for Small and Medium Enterprises. The CGFTSME scheme, conceived by the Government and run by SIDBI, lets banks give loans to small enterprises without insisting on collateral.
Mr Bhasin also wants to use this opportunity to lend to get the borrowers to open savings accounts with the bank — a move that will serve the objective of financial inclusion as well as fetch the bank low-cost deposits.
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