The Hindu Business Line : Central Bank raising capital adequacy ratio

Mumbai, July 13 Central Bank of India plans to raise capital through an initial public offering to meet its future capital requirements arising out of Basel-II standards.

“The capital will be used to support the credit offtake. It will also be invested in technology and human resource development,” said Ms H.A. Daruwalla, Chairman and Managing Director, Central Bank of India.

The bank plans to issue a total of 8 crore shares of which 40 lakh equity shares have been reserved for its eligible employees and 7.6 crore shares would constitute net issue to the public.

The bank’s capital adequacy ratio stood at 10.4 per cent, of which Tier-I capital was at 6.32 per cent as on March 31, 2007. “Post-issue the capital adequacy ratio is expected to increase to about 11.8 per cent,” said Ms Daruwalla.

The bank recorded a net profit of Rs 498 crore and total income of Rs 6,710 crore as of March 31, 2007. Its deposits stood at Rs 82,776 crore (Current Account and Savings Account constitutes about 42 per cent of total deposits) and advances of Rs 53,630 crore.

Net interest margin of the bank was at 3.16 per cent. Net non-performing assets stood at 1.7 per cent as of March 31, 2007 and the bank plans to bring it to below 1 per cent this fiscal, said Ms Daruwalla.

The issue has been rated by Credit Analysis and Research Ltd as CARE IPO 4, which indicates above average fundamentals, said a statement from the bank.

The book running lead managers to the issue are ICICI Securities Primary Dealership Ltd, Citigroup Global Markets India Pvt Ltd, Enam Financial Consultants Pvt Ltd, IDBI Capital Market Services Ltd and Kotak Mahindra Capital Company Ltd.

Central Bank of India has 3,194 branches.