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Ramesh Sharma

Follow-on public offer: Mr Arun Ramanathan (left), Secretary, Financial Sector, and Mr S.K. Goel, Chairman and Managing Director, UCO Bank, at the launch of pre-funded cheques, in the Capital on Tuesday. -

Our Bureau

New Delhi, Sept. 2 UCO Bank, a public sector bank, is looking to tap the capital market with follow-on public offering (FPO) during the December quarter this year, its Chairman and Managing Director, Mr S.K. Goel, said here on Tuesday.

Plans are afoot to restructure the bank’s Rs 800-crore paid-up equity capital ahead of the FPO to enable it to get premium price for the offering.

The Finance Ministry has given in-principle approval for the capital restructuring, but Cabinet nod for the entire exercise is awaited, according to Mr Goel.

“We are examining the proposal of the bank”, Mr Arun Ramanthan, Secretary, Financial Sector, told Business Line, when asked about the status of the restructuring exercise.

Indications are that the Union Cabinet may consider the proposal in the coming weeks.

As per the planned restructuring exercise, Rs 300 crore of the existing Rs 800 crore equity capital of UCO Bank would be converted into preference capital. The bank would issue Rs 100 crore of equity capital at a premium (overall expected mop-up is Rs 500 crore - Rs 600 crore) in December quarter, taking its overall equity capital to Rs 600 crore. Besides the Rs 300 crore of preference capital, the bank would also be permitted to raise another Rs 325 crore of preference capital.

“Hopefully, by the third quarter market should stabilise and that would provide us opportunity to raise capital from the primary market,” Mr Goel said.

Currently the government holds 75 per cent stake in Kolkata-based bank. Following the FPO, the stake would come down to 53.8 per cent.

On debt recovery, Mr Goel said the bank expected to recover Rs 400 crore from its bad assets and by the end of the fiscal, it would be Rs 800 crore.

Meanwhile, Mr Ramanathan launched UCO Bank’s new product –“pre-funded cheque”. This is an innovative instrument where the cheque would be considered as a pay-order for the acceptor, said Mr Goel.

“Back-up funds are arranged at the time of issuance itself. One is protected against cheques being dishonoured on account of insufficiency of funds. It is a sort of novel gift cheque and a value-added product for our customers”, a UCO Bank official said.

The pre-funded cheques are issued in three pre-determined denominations i.e up to Rs 1,000, Rs 5,000 and Rs 10,000 in cheque books containing 10 multi-coloured cheque leaves. The new product will be introduced at 261 selected CBS branches of the bank.

More Stories on : Public Sector Banks | IPOs

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