The Hindu Business Line : Central Bank charts revival plan

Revival strategy
A topline growth of 25 per cent over Rs 1.05-lakh crore. Augmenting the capital adequacy ratio.
Reducing NPAs, expanding branch network.
Strengthening the delivery channels in the form of additional ATMs.

MS H. A. DARUWALLA

Hyderabad , Aug. 6

Central Bank of India (CBI) has chalked out a major revival programme and expectes an improvement in performance in the current fiscal. The move comes in the wake of the bank having suffered on several performance parameters during the fiscal ended March 2006, mainly owing to a treasury income fall of over Rs 400 crore.

According to the CBI Chairperson and Managing Director, Ms H.A. Daruwalla, the strategy involves a topline growth of 25 per cent over Rs 1.05-lakh crore, significantly improving profitability, augmenting capital adequacy ratio, reducing non-performing assets, expanding branch network and connectivity and strengthening delivery channels in the form of additional automated teller machines (ATMs).

The bank, which has suffered a fall in capital adequacy at 11.03 per cent during the last fiscal from 12.15 per cent in the previous fiscal, is keen on tapping the capital market with an initial public offering (IPO) before the current fiscal-end, Ms Daruwalla told Business Line.

"We have recently made representations to the Union Ministry of Finance (MoF) and the Reserve Bank of India (RBI) seeking their clearances for the IPO and also urging separate treatment to a portion of our existing paid-up capital. We have a huge capital base of Rs 1,124 crore and given our profitability, the EPS appears poor. We have sought the conversion of a substantial portion of the paid-up capital into preference capital," Ms Daruwalla said.

Tier II debt issue

Meanwhile, keeping in view the growing business volumes and also to meet the Basel-II norms, CBI is mulling over raising subordinated debt of around Rs 700 crore under tier-II capital. The tier-II issue could be completed before the calendar year-end and improve the capital adequacy to at least 11.3 per cent , she said.

Network expansion

The bank proposes to substantially expand its branch network from 3,129 branches . In the South alone, the bank proposes to open 32 branches in Andhra Pradesh and 35 in Karnataka. It also proposes to add 320 more ATMs to the existing 180 , taking the total network to 500 .

The bank has also embarked upon a major technology initiative of implementing core-banking solution across 700 branches at an investment of Rs 150 crore through Tata Consultancy Services .

Proposes cut in NPAs

The bank proposes to reduce its non-performing assets by at least Rs 650 crore through cash recoveries, compromises, upgradation and write-offs.

During the last fiscal, the bank could bring down the gross NPAs in percentage terms to 6.85 per cent from 9.01 per cent in the previous fiscal, however, in absolute terms theymoved up to Rs 2,684 crore from Rs 2,621 crore. The net NPAs have also gone up to 2.98 per cent from 2.59 per cent.

More Stories on : Public Sector Banks | Non-Performing Assets

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