The Hindu Business Line : FIIs offer high premium for public issue — Allahabad Bank prefers wide shareholder base

FOREIGN institutional investors (FIIs) based in Singapore would like to underwrite with substantial premium the entire Rs 100-crore public issue of Allahabad Bank to be made by the end of this year or early next year. But the bank management has no desire to entertain any such move.

Mr O.N. Singh, CMD of the bank, told Business Line here on Wednesday that the proposed issue should be widely held among the public. The premium amount, which would be market-driven, would be finalised once the clearance for the issue from the appropriate authorities was obtained, Mr Singh said, adding, "I hope to get all the clearances within a week or 10 days".

He did not foresee any resistance either from the Government or from RBI even if the bulk of the issue were offered to FIIs. "Right now FIIs hold a meagre 0.06 per cent equity of the bank while as per rules, their holding can go up to 20 per cent," he observed.

The post-issue paid-up capital of Allahabad Bank would be Rs 446 crore and FIIs holding could be up to 20 per cent of it. "But we have no plans to offer the bulk of the proposed issue to the FIIs," Mr Singh said.

Allahabad Bank's IPO at par took place two years ago when the bank mobilised Rs 100 crore.Diversification of resources, particularly in foreign currency operations, is one area engaging the attention of Allahabad Bank, which did not have either dollars or cross-currency resources, the CMD said. This would be done partly by opening up overseas offices and partly by entering into tie-ups with banks already having foreign branches.

Allahabad Bank is joining hands with Punjab National Bank to float a subsidiary to open a branch in Kazakhstan, which is among the fastest growing nations in central Asia.

There is also a proposal to open on its own a branch in Hong Kong and a representative office in China.

The bank posted the highest growth among all public sector banks, including State Bank of India, in agricultural financing, the rate of growth being as high as 300 per cent. In the first six months of the current fiscal, the disbursements amounted to Rs 1,000 crore compared with Rs 300 crore in the same period of last year.

Attributing the growth to aggressive marketing as also launching of new products such as Kisan Shakti Yojana, Mr Singh said the segmentation of products for rural branches was becoming more and more important with the bank having as many as 936 branches out of the total branch network of 1,935.

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