The Hindu Business Line : Allahabad Bank to raise Rs 300 cr this fiscal

Kolkata, Jan. 16 For the first time, Allahabad Bank will opt for perpetual bond to raise Rs 300 crore. “It is Tier I capital and we will issue it in the current quarter itself”, Mr A.C. Mahajan, CMD of the bank, told newspersons here on Wednesday. The bank’s Tier I capital, as a result, will rise to more than Rs 4,633 crore.

The additional resources, as the CMD pointed out, would be needed to meet the increased demand for credit.

The credit demand which till the third quarter was around 20 per cent was expected to rise to 25 per cent by March. “We propose to give a lot of thrust to agriculture lending in the current quarter”, he said.

Besides, as he pointed out, the additional fund to be raised would provide the cushion to maintain capital adequacy ratio within 13 per cent. At the end of the third quarter, the ratio was 12.84 per cent.

Mr Mahajan ruled out any rise in interest rates. “There is no case for increasing the interest rates “, he said. If at all, there would be a downward revision. But the bank, as he pointed out, would prefer to follow wait and watch policy.

Q3 net rises

The rise in CRR, he said, had definitely impacted the bank. But the profit growth would suggest that the impact had been duly taken care of. During the third quarter of the current fiscal (September- December 2007), the net profit amounted to Rs 365.05 crore as compared to Rs 286.13 crore in the same period of the last year.

The rise in profit was attributed to the rise in interest income from Rs 1,304 crore in the third quarter last year to Rs 1,538 crore in the third quarter of 2007, treasury income Rs 290 crore (Rs 50 crore) and trading in equities at Rs 301 crore (Rs 42 crore).

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