Money & Banking

Allahabad Bank to raise Rs 2,600 cr thru Tier II bonds

Our Bureau Mumbai | Updated on January 24, 2011 Published on January 24, 2011

Mr O.N. Singh (left), Executive Chairman, Universal Sompo Insurance Company Ltd, with Mr J. P. Dua, CMD, Allahabad Bank, at the launch of Universal Sompo's health insurance scheme in Mumbai on Tuesday.   -  BusinessLine

Allahabad Bank is looking to raise Rs 2,600 crore through tier II bonds in this quarter, said Mr J.P. Dua, Chairman and Managing Director. The coupon rate of the issue will depend on the market.

The bank has also approached the Government for infusion of Rs 1,000 crore of equity capital through the preferential issue route, Mr Dua added.

The bank's credit growth is at 30 per cent, while deposit growth is at 15 per cent. The growth in the low-cost deposits (current and savings accounts) is at 23 per cent.

As deposit rates have gone up sharply, the bank has no plans to raise deposit rates, Mr Dua said. With regard to raising lending rates, Mr Dua said it will depend on what action the Reserve Bank of India takes in the monetary policy, to be announced later this month.

He was speaking on the sidelines of a press meet held to announce the launch of Universal Sompo's health insurance scheme. Universal Sompo has launched a health insurance scheme called Sampoorna Swasthya Kavach for customers of Allahabad Bank. The company is targeting a sale of a lakh policies in the first year itself.

The insurer, which reported a loss of Rs 53 crore last year, is expecting to bring down its losses to around Rs 30 crore this year. “We should breakeven by next year, which will be third full year of our operations,” said Mr O.N. Singh, Chairman, Universal Sompo General Insurance company. Universal Sompo is a joint venture between Allahabad Bank, Indian Overseas Bank, Karnataka Bank and Tokyo-headquartered Sompo Japan Insurance.

The company has a solvency margin of almost 300 per cent against a regulatory requirement of 150 per cent. “We will not require much capital as our solvency margin is high,” said Mr Singh. Universal Sompo is targeting to collect Rs 300 crore in gross written premium (GWP) by fiscal-end. It has collected Rs 220 crore in GWP till now.

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Published on January 24, 2011
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