Financial Daily from THE HINDU group of publications
Thursday, Mar 23, 2006
Financial Daily from THE HINDU group of publications Thursday, Mar 23, 2006 |
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Money & Banking
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Public Sector Banks BoI mulls raising capital via hybrids Our Bureau
Mumbai , March 22 Bank of India is considering raising capital in foreign currency through hybrid instruments. The bank will take a decision on the hybrid instruments in the first quarter of next fiscal, said Mr M. Balachandran, Chairman and Managing Director, BoI. "We will not expand our equity base as of now. We are exploring the possibility of using the new tier I and tier II instruments of raising capital," he said. The bank has also sought approval from the Reserve Bank of India to raise these instruments in foreign currency. The RBI recently allowed banks to raise capital through perpetual bonds, which would be tier I capital, and through upper tier-II bonds. Both these instruments can be raised in foreign currency, subject to the RBI approval. Bank of India already has approval for Medium Term Note programme of five-year bonds for $1 billion. Of this, the bank has so far raised only $250 million. The bank is planning to convert the rest of the Medium Term Note programme into tier I or upper tier II bonds to be issued in foreign currency. According to a senior official of the bank, as these hybrid instruments are more popular in international markets than in India, it makes more sense to raise them in foreign currency. The capital thus raised can also be given to the bank's foreign branches for their capital requirements.
CBS rollout
Mr Balachandran was speaking to reporters at the sidelines of a press conference to announce the rollout of Bank of India's core bank solution (CBS), with Hewlett-Packard. The bank has implemented CBS in 550 branches. By April 2007, CBS will be implemented in 1,000 branches and cover 85 per cent of the bank's business. Pressure on liquidity in the banking system will ease by April, he said.
More Stories on : Public Sector Banks | Forex | Govt Bonds
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