The Hindu Business Line : BoI not to tap capital market in near future

BANK of India (BoI) has no immediate plans to tap the capital market with a follow-on public offering (FPO) to augment its capital base, the Chairman and Managing Director, Mr M. Balachandran, has said.

It may, however, in the coming days look at other avenues including preference shares and hybrid instruments to bolster capital and conform to Basel II requirements.

"We are awaiting the guidance of the RBI on preference shares (Tier I) and also for new instruments (Tier III). There is already sufficient headroom for us in Tier II. There is no plan for a FPO in the near future," Mr Balachandran told presspersons here.

The Government's holding in BoI is currently pegged at 69 per cent. The bank currently has a capital adequacy ratio of 11.5 per cent.

Deposits & Advances: BoI's deposits have grown by 12.92 per cent to Rs 89,551 crore as on end-December 2005 against a level of Rs 79,305 crore in March 2005. Advances as on end-December 2005 stood at Rs 67,000 crore as against Rs 57,679 crore in March 2005.

"We had targeted a 15 per cent growth rate for deposits for the current fiscal. The targeted credit growth rate is 22 per cent. It is becoming difficult to attract deposits because of the interest rates", Mr Balachandran said.

Mr Balachandran said the bank was aiming at gross non-performing assets (NPA) level of 3 per cent and net NPA of 1.5 per cent by March.

Gross NPA level had come down from 7.1 per cent in September 2004 to 4.59 per cent as on September 2005. Similarly, the net NPA level had come down from 4.17 per cent in September 2004 to 2.23 per cent in September 2005.

UTI Securities buy: On the matter of buying out UTI Securities, Mr Balachandran said Bank of India was still keen on acquiring that company. As regards the Ketan Parekh and Madhavpura Mercantile Cooperative Bank (MMCB) issue, he said that he was hopeful of recovering a significant portion of Rs 130 crore that the bank lost in the 2001-share market scam involving stockbroker, Mr Ketan Parekh, and the MMCB.