The Hindu Business Line : Allahabad Bank defers rights issue

Kolkata, Oct 3 Kolkata-headquartered Allahabad Bank will not opt for the rights issue at present, according to Mr K. R. Kamath, Chairman and Managing Director of the bank.

The board of directors had approved the proposal to approach the Finance Ministry to obtain permission for the rights issue in June this year.

Explaining the reason behind the deferral of the issue, Mr Kamath said the bank would not want to dilute the government holding which is at 55.23 per cent at present. The market conditions were also not favourable for the issue, he said.

Mr Kamath was speaking on the occasion of the signing of a distribution agreement with Universal Sompo General Insurance Company Ltd, here on Friday. The capital adequacy ratio of the bank as on September 30, 2008 stands at 11.68 per cent and it has no immediate plans of raising capital, Mr Kamath said.

“We have headroom to raise Rs 2,500 crore worth Tier I and Tier II capital which can keep the bank going for the next two years. We will raise funds at the opportune time,” he pointed out.

Talking about the distribution agreement, Mr O N Singh, Executive Chairman, Universal Sompo said the company would look at distributing 30 odd general insurance products through all the branches of Allahabad Bank.

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