The Hindu Business Line : Indian Bank IPO not until capital reduction

Indian Bank will not come out with its initial public offering unless it is able to bring its Rs 743-crore capital further down, either by way of converting a part of the equity capital into preference, or by returning part of the capital to the Government.

Sources in the bank told Business Line today that the bank was not in any hurry to come out with its IPO, given the "healthy" capital adequacy ratio of 13 per cent. Even after providing for `operational risk', the bank's CAR will be not less than 11 per cent.

The idea of swapping a part of the equity capital into preference came up in discussions with the Finance Ministry and the bank has given the Reserve Bank of India proposals outlining different scenarios for different amounts of capital conversion, sources said.

A senior bank official said that it was unlikely that the bank's IPO will happen in 2006-07.

Another reason why the bank was not in a hurry to raise capital was that the bank was not going aggressively after advances. Last year, the bank's advances grew 22 per cent. Target for the current year has been set at 20 per cent. "We are not purchasing advances," the official said.

He also noted that the bank's profitability would not be affected by "selective lending". Profits have been coming from NPA recovery, which the bank's Chairman and Managing Director, Dr K.C. Chakrabarty, had termed as a "gold mine".

most 100 per cent. The bank's SHG loan book is about Rs 360 crore — it grew 30 per cent last year.

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Indian Bank IPO not until capital reduction