Andhra Bank to go in for ₹800 cr equity infusion

Andhra Bank will raise around ₹800 crore in the next financial year to meet capital adequacy norms. Ruling out a follow on public offer as it is an expensive affair, CVR Rajendran, Chairman and Managing Director of the bank, said it may opt for equity infusion by the Government or through qualified institutional placement. “It could even be a mix of both,” he said.

Following the ₹200-crore equity infusion by the Government early this year, the Government’s holding in the bank has gone up to 60 per cent.

At the end of the third quarter ended December 31, 2013, the bank’s business stood at ₹2.35 lakh crore. “Assuming that we grow at 20 per cent, we would require around ₹800 crore additional capital by the end of the next financial year,” he said.

On the bank’s third quarter results, Rajendran admitted that at ₹6,000 crore (5.55 per cent), the bank’s NPA is one of the highest in the industry, and a chunk of it was from the power sector, followed by other infrastructure verticals.

He, however, said the bank need not worry about that as most of its lending were against assets.

“Close to 20 per cent of our NPA is from the power sector. Most projects could not even take off as gas or coal was not available for them, thanks to policy logjam,” he said.

By focusing more on retail lending, the bank plans to bring down its corporate sector exposure to 40 per cent from the current 52 per cent.

It will also scale up its recovery mechanism in the months to come, which will help the bank clean up its balance sheet before the end of third quarter of 2014-15.

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