The Hindu Business Line : Bank of India to raise Rs 1,750 crore

Bank of India intends to raise Rs 250 crore through an issue of perpetual bonds and another Rs 1,500 crore through `upper tier-II' instruments, the bank's Chairman and Managing Director, Mr M. Balachandran, told a press conference here on Thursday.

Bank of India's capital adequacy ratio stands at 10.75 per cent after taking into account the `market risk' as per Basel-II norms, he pointed out. The fund raising effort is to bolster the capital base of the bank.

NO DEPRECIATION

Answering a question, Mr Balachandran said that Bank of India would not take any hit on account of depreciation of its investments, because about 74 per cent of the investment book is in the `held to maturity' category. The rest of the portfolio is also of short duration and hence the bank is not affected by the rise in bond yields.

Mr K.R. Kamath, Executive Director, said that the bank also did not have any investments more than statutorily required. The officials also foresaw no resource crunch to fund credit growth. "Resources are available, but at a price," Mr Balachandran said. He said that the average yield on advances was also growing in tandem with rising cost of deposits, leaving the bank's margin intact.

To adopt 4 villages

Bank of India also announced the adoption of four villages in Tiruvallur district in Tamil Nadu. The move is a part of the bank's `Mega project for integrated development' of 101 villages. The idea is to showcase the model villages to commemorate the bank's centenary year, Mr Balachandaran said.

The financial outlay for the next three years for the economic development of these four villages would be Rs 14 crore, of which Rs 5 crore would be lent in the first year, he said.

Under the adoption scheme, the bank would provide financial assistance for dairy development, small road transport operations, solar lighting systems, crop loans, establishment of milk processing and milk product manufacturing units, lintels and rice processing units, cattle feed manufacturing units, oil extraction and soap manufacturing units and land development including minor irrigation projects.

He also announced the launch of a General Credit Card, with credit limit of Rs 25,000 meant for rural populace.

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