The Hindu Business Line : Canara Bank plans to raise Rs 3,000 cr as capital

Canara Bank, which recorded nearly 25 per cent growth in total business in 2005-06, is planning to raise Rs 3,000 crore as capital in the current year.

The bank is looking at the possibility of raising the amount through three routes - equity, tier- I hybrid issue, and tier- II bonds - for Rs 1,000 crore each, said Mr M.B.N. Rao, Chairman and Managing Director.

He also said that the bank's capital adequacy ratio stood at 11.22 per cent as on March 31, 2006. As of now, this is well above the stipulated benchmark of nine per cent.

To raise capital

The capital will have to be raised under the Basel II norms, which are to be introduced shortly, in order to cover market and operational risks.

Besides, the bank is contemplating opening of a few overseas offices in future, which will require additional capital, Mr Rao said.

Canara Bank has obtained the permission from the Reserve Bank of India for opening a representative office in Sharjah. The office will start functioning this year.

Mr Rao said that the bank proposes to start a joint venture in the insurance sector to "manufacture" its own products.

Currently, it is acting as corporate distributor for Aviva Life Insurance Company in the life segment and United India Insurance Company in the non-life segment.

Talks are on with some leading players in the insurance sector for setting up the joint venture, he added.

Core banking solution

The bank has targeted implementation of core banking solution in over 1,000 branches in the current year.

It has entered into an arrangement with IBM for developing a core banking package that will be comparable with the best in the world, Mr Rao said. In the area of ATMs too, the bank is embarking on a network expansion plan. The number of ATMs is planned to be increased from 815 as of now to about 2,000.

The bank is targeting a global business of Rs 2,33,000 crore in the current year, representing a growth of 18.74 per cent over last year. The business projection comprises Rs 1,38,000 crore as deposits and Rs 95,000 crore as advances.

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