The Hindu Business Line : Andhra Bank to raise $300 m loan

Kolkata, June 18 Andhra Bank plans to raise $300 million worth foreign currency loan in 2008-09, of which $125 million would be raised in the next few weeks. The amount raised would fund the bank’s growth needs, said Mr K. Ramakrishnan, Chairman and Managing Director.

The bank has headroom to raise Rs 200-300 crore through Tier II bonds. “We may raise the same by December this year in case there is a requirement,” he told newspersons on the sidelines of Banking Conclave organised by the Federation of Indian Chambers of Commerce and Industry here, on Wednesday.

The capital adequacy ratio stood at 11.61 per cent as on March 31, 2008. The bank is targeting a growth of 20-22 per cent in its deposits and advances this year. The total business stood at Rs 85,000 crore, with advances at Rs 35,000 crore in 2007-08.

Rate hike

The bank plans to increase interest rates on deposits by 50 basis points in order to bring it in line with the industry. “Returns on fixed deposits have turned negative because of the high inflation. We will take a call on deposit rates today,” Mr Ramakrishnan said.

The bank would, however, keep the lending rates unchanged at present. “No banks can increase interest rates on advances indiscriminately as that will push them out of competition,” he said. But this could put a pressure on the margin of banks, he admitted.

Stressing on the need for benign interest rates, he said, “Interest rates should cover costs and risks and should not be too high as it adds to the risk of defaults.”

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