The Hindu Business Line : BoB in no hurry for public issue — Enough headroom to raise Tier II capital

BANK of Baroda (BoB), which has the scope to raise another Rs 2,000 crore of tier-II capital (long-term debt), is not really hard pressed to come out with a public issue, the bank's top brass told Business Line today.

Only in September the bank had raised Rs 770 crore (tier-II capital) through a bond issue at a rate of 7.45 per cent a year.

The BoB Chairman and Managing Director, Dr Anil Khandelwal, said the bank was on an even keel on all the major parameters - capital adequacy, low cost deposits, advances and investments.

The bank's capital adequacy ratio is at 12.78 per cent and it does not also see a significant post-Basel-II dip in the ratio.

The recent move of the RBI allowing IFR balances to be taken as part of tier-I capital, has given the bank an additional headroom of Rs 550 crore, for raising tier-II capital.

Asked if this meant that the bank would not come out with a public issue, which was indicated earlier, the bank's Dr Anil Khandelwal, said, "I cannot say that."

On the deposits-front, the bank's Executive Director, Mr A. C. Mahajan, said that BoB's drive on "customer centricity", which included 12-hour and 24-hour branches, had produced in a 45-day campaign period starting from September 1, 12.45 lakh new savings bank accounts. These account holders alone put about Rs 650 crore into the bank, he said.

In a full year, this chunk of deposit would mean an addition of about Rs 30 crore to the bottomline.

Domestic advances grew Rs 6,300 crore in the first half of the current year. This works out to an annualised growth of 33 per cent. The bank has an advance book of Rs 59,000 crore, the average yield of which is 7.58 per cent.

Meanwhile, BoB is close to getting necessary clearances for its new overseas branch, in Trinidad & Tobago. The bank has also received a licence from Singapore to open `overseas banking unit' there.

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