Kolkata, July 15
ALLBANK Finance, the subsidiary of Allahabad Bank that has been lying dormant, has been granted a merchant banking licence by the Securities and Exchange Board of India (SEBI).
The company hopes to begin merchant banking activities shortly, the first of the several activities it plans to take up in due course.
Allbank Finance, which has weighed the possibility of entering debt advisory and stock broking, has identified insurance as a potential business.
It will actively consider the prospects of establishing a bigger presence in insurance. The possibility of tying up with specialist agencies is not ruled out.
The board of directors of Allbank Finance would be recast soon, Mr O.N. Singh, CMD of Allahabad Bank told newspersons, adding that the company recorded a nominal profit in the last fiscal, chiefly from the sale of securities. Incidentally, its capital base stands at Rs 60 crore.
Q1 results: Meanwhile, Allahabad bank saw a business growth of 4.04 per cent in the first quarter eneded June 30. Operating profit was Rs 230.37 crore during April-June 2005 as against Rs 318.39 crore during the corresponding period of the previous year. Net profit increased from Rs 137.65 crore (Rs 162.98 crore).
Allahabad Bank, which has mandated XLRI Jamshedpur to re-write its HR policy, expects the management school to send the first report soon.
It may be mentioned here that a report on BPR (business process reengineering) has been already submitted by Ernst & Young, its consultants.
It is also eyeing the southern market for business growth.
A number of southern banks have relatively small asset bases - these could well be takeover targets for Allahabad Bank in course of time, Mr Singh indicated.
The bank, the CMD mentioned, has recorded a 25 per cent growth in retail credit in recent times. However, wholesale debt recorded a sluggish increase.
Lending has turned into a very competitive business and banks are vying with each other to secure mandates, he said.