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Canara Bank will seek shareholders’ nod on July 21 to raise fresh capital to fund business growth.
This will be an enabling resolution and the public sector bank is yet to firm up the route or the amount of capital that would be raised, a top official said.
“Different options are there. The possibility of qualified institutional placement (QIP) is very high. But the Board will have to take a final call”, Ashok Gupta, Executive Director, Canara Bank told Business Line.
He said that the Canara Bank’s Board will soon meet to firm up the capital raising route and the amount to be raised.
Canara Bank’s existing paid-up capital stood at ₹ 461.26 crore. As at end March 2014, the capital adequacy of the bank stood at 10.36 percent, well above the 9 per cent stipulated by the RBI.
Recently, R.K. Dubey, Chairman & Managing Director, Canara Bank, had reportedly said that the bank was looking to mobilise about ₹ 3,000 crore capital to fund business growth.
RBI rate cut unlikely
Meanwhile, Dubey on Friday said that he does not expect any policy rate cuts from the RBI in the short term given that inflation was still out of control.
“At this juncture, given the exchange rate movement (rupee-dollar) and inflation level, there will for now be no rate cut action from RBI”, Dubey told Business Line.
He highlighted that the ongoing Iraq crisis and higher inflation likely to come out of rail fare hike will dampen all the good intentions of the new Modi-led government.
“It will take time (for the new government). They have a legacy problem that needs to be sorted out. You can’t expect the new government to produce miracles in one month. They have to be given time of say 3-6-9 months to bring results”, Dubey added.
Canara Bank shares ended 1.95 per cent lower at ₹ 424.05 on the BSE on Friday.
This public sector lender had recorded a net profit of ₹ 2,438.19 crore on a turnover of ₹ 39,547.61 crore for the year-ended March 31, 2014.
srivats.kr@thehindu.co.in
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