Money & Banking

South Indian Bank plans to raise Rs 500 crore Tier II bonds this fiscal year

V Sajeev Kumar Kochi | Updated on October 28, 2019

VG Mathew, MD and CEO, South Indian Bank

The Kerala-based South Indian Bank is going ahead with its capital raising plans for which the Board has given its approval to issue Rs 500 crore Tier II bonds. The bank has also received its nod from the Board for the dilution of basic equity by 30 crore shares.

V G Mathew, MD and CEO told BusinessLine that the bank plans to launch the bond issue and consider various options for raising equity in the second half of the current year itself.

On the muted demand affecting automobile loans, he said the exposure in vehicle loans was limited and the bank still has the opportunity for growth in this sector. “We are still in a growing phase and with a network of more than 900 offices, the growth is well distributed across the country.”

“The strategy of bringing down the corporate exposure and increasing the retail, MSME and agri portfolios has strengthened the balance sheet. The pure retail portfolio has grown at 20 per cent and is already accounting for 30 per cent of the loan book, taking the bank closer to its stated objective of becoming a retail banking powerhouse,” he said.

When asked about the Reserve Bank of India’s (RBI) rate cut being passed on to customers, the Managing Director said that 30 basis points (bps) has been passed on to the borrowing customers through reduction in the Marginal Cost of Funds based Lending Rate (MCLR) over the last one year. The bank’s current interest rates are very competitive. Besides, from October 1, the lending rates for retail, micro and small segment borrowers are directly linked to repo rate which ensures that any reduction in repo rate is fully passed on to them.

On the position of non-peforming assets (NPAs) and recovery efforts, he said the bank has been able to meet the targeted levels of recovery and upgrades which has helped in reducing the gross non-performing assets (GNPA) level from 4.96 per cent to 4.92 per cent on a sequential basis. “We could bring down the corporate exposure from 35 per cent of the loan book to 31 per cent during the last one year in line with the strategy of reducing large corporate exposure,” he said.

To a question on the progress of insolvency and bankruptcy cases, Mathew said there are three IBC accounts adding up to Rs 562 crore. While resolutions are awaited in all three cases, the bank has fully provided for and written off two accounts covering Rs 336 crore.

Published on October 28, 2019

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