Central Bank of India will have to raise Tier-I capital worth about Rs 2,500 crore in order to meet its credit growth target of 25 per cent during the current fiscal. The bank will also consider various options including rights issue and follow on public offer (FPO) for capital raising, according to its Chairman and Managing Director, Mr S. Sridhar.
“We plan to raise Rs 2,500 crore in order to support a credit growth of 25 per cent and to shore up our capital adequacy ratio. We are in the process of analysing the mode of raising funds. We are also in talks with the government,” Mr Sridhar said while talking to newspersons on the sidelines of a banking event organised by the Federation of Indian Chambers of Commerce and Industry on Thursday.
The Tier-I capital of the bank, which currently stands at about 6.4 per cent, would improve to eight per cent post the capital infusion. The capital adequacy ratio of the bank would also improve to 13 per cent from 12.24 per cent as on March 31, 2010, he said.
The bank had recently received capital infusion of about Rs 250 crore from the government by way of Innovative Perpetual Debt Instruments.
Central Bank of India, Mr Sridhar said, registered about 20 per cent growth in credit and about 10-11 per cent growth in deposits during the first quarter (April-June) of the current fiscal.
Overseas branches
The bank was exploring possibilities of setting up overseas branches and was in the process of applying to the Reserve Bank of India for the same. “We want to establish our presence in Hong Kong and Bahrain; this will be either by way of a branch or through a subsidiary. We are in the process of applying to RBI,” he said. The bank was also looking at establishing its presence in countries where there are not too many Indian banks at present such as Africa, South and South East Asia, he added.
On being asked about the possibility of an increase in interest rates, he said, “Despite the RBI announcing rate hikes recently we did not hike our interest rates over the past three-to-four months. But inflation seems to be a cause of concern now so we will keep a close watch and see what happens on July 27 and then take a call on interest rates.”
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