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— Shashi Ashiwal

Capital raising plans: Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India (right), and Mr K.R. Kamath, Executive Director, at a press conference in Mumbai on Thursday.

Our Bureau

Mumbai, Dec 27 Bank of India plans to raise at least Rs 1,350-Rs 1,400 crore through the Qualified Institutional Placement route for funding credit expansion and new ventures. The equity shares will be offered to public sector enterprises and mutual funds.

“The capital will be a buffer for us to meet our credit expansion needs and for investment in lucrative joint venture opportunities. We hope to close the QIP issue by the end of next month,” said Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India.

Bank of India will raise equity capital by issuing around 3.78 crore new equity shares at a minimum floor price of Rs 359 per share or more if the shares gain at the time of tapping the market. The QIP will dilute the Government’s holding in the Bank’s shares by 5 per cent from 69.47 per cent to 64.47 per cent.

The bank’s capital adequacy ratio at the end of September stood at 12.57 per cent. Of this, Tier I stood at 7.08 per cent and Tier II at 5.49 per cent. The bank’s total credit crossed Rs 1 lakh crore and assets are at Rs 1.58 lakh crore.

The bank plans to use the capital in its life insurance venture with Union Bank of India and Dai Ichi Mutual Life Insurance. BOI plans to initially invest Rs 127 crore in the insurance venture.

Mr Narayanasami said the company is also looking at setting up an AMC through a joint venture.

Bank of India had actually withdrawn from the mutual fund segment. In January this year, SEBI had cancelled the certificate of registration of BOI Mutual Fund and had also withdrawn the approval granted to the erstwhile BOI Asset Management Co Ltd to act as the asset management company.

This year, the bank raised Rs 650 crore through perpetual debt and Rs 734 crore on account of revaluation.

On being asked about why the bank opted for a QIP instead of a rights issue, Mr Narayanasami said that if the Government had to fund all the banks’ capital requirement for Basel II ( Rs 50,000 crore) then it could result in a fiscal deficit.

He added that the timeframe for executing a QIP was much shorter compared to a follow on public offer. “There is a lot of organisational effort that goes into a follow-on public offer. We will also be saving in terms of costs by opting for a QIP,” Mr Narayansami said.

On Thursday, BOI’s shares closed 2.05 per cent lower at Rs 360.80 on the BSE.

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