The Hindu Business Line : `UTI Bank largest arranger for debt'

UTI Bank has emerged as the largest arranger for debt in the domestic markets for financial year 2003-04, by arranging placements worth Rs 17,971 crore through 67 issues, according to a report by financial research firm Credence Analytics.

UTI Bank's investment banking team of 10-12 people has occupied the numero uno position for the second year in a row. When contacted said Mr Pawan Bansal, VP, Merchant Banking, UTI Bank, "We got a lot of PSU issuances and also HDFC in the last year. This year we have a target of arranging Rs 20,000 crore."

UTI Bank was closely followed by ICICI Bank, which arranged Rs 15,414 crore after which came AK Capital, IDBI Capital and HSBC in descending order. These entities typically act in a consortium as investment bankers to the debt issue, initially absorb the full amount and later sell it down to a clutch of investors mainly provident funds, mutual funds and banks at a margin.

Non-SLR borrowing (i.e. borrowings other than by the Central and State Government) grew by a mere 8 per cent in fiscal 2004 to Rs 52,649 crore (Rs 48,424 crore) despite low yields and good investor appetite. Public financial institutions (such as IDBI, PFC, IRFC, Nabard, SIDBI, UTI, the various SFCs etc) raised maximum debt in the year at Rs 13,110 crore followed by State-level undertakings (SLU), which raised Rs 9,615 crore. SLU borrowing had seen a consistent fall in the preceding two years but fiscal 2004 saw increased expenditure in infrastructure and power sectors. PSU borrowing dipped by more 50 per cent to Rs 6,656 crore while banks and other financial institutions borrowed a total of Rs 10,128 crore, said the report.

Although debt mobilisation did pick up towards the end of the fiscal, going forward the domestic debt market could remain subdued as alternative instruments like foreign currency convertible bonds are in good demand.

However, the creation of the Rs 50,000-crore infrastructure fund by the Government in the interim Budget is expected to perk up the market.

According to Mr Bansal, "The debt mobilisation market should grow faster in fiscal 2004-05 at 20-25 per cent since domestic borrowing should be cheaper as US interest rates are headed upwards."

The securitisation market, rather nascent in India, grew quite actively in the fiscal with around Rs 8,115 crore worth of loans/assets securitised.

The largest players were ICICI Bank (Rs 5,104 crore), Citibank (Rs 1,777 crore) and Standard Chartered Bank (Rs 480 crore).

These entities found securitisation as a good tool to maintain capital adequacy ratio above the stipulated limit. The only innovation during the year was securitisation of a micro finance portfolio by ICICI Bank.