Money & Banking

Syndicate Bank to raise up to ₹500 cr via ESPS

V Sajeev Kumar Kochi | Updated on January 12, 2019 Published on January 11, 2019

Bank creates separate vertical to manage stressed assets of ₹5 crore and above

Public sector lender Syndicate Bank has proposed to raise equity of up to ₹500 crore by issuing stocks to its staff members under the ESPS scheme. The bank will issue 300 million shares to employees to raise the capital.

Twin objective

According to S Krishnan, Executive Director, the share allotment is with a twin objective of retaining talent while raising capital. The government/public shareholding is presently in the ratio of 72:28, and the government may be willing to shed 2 per cent of its holding.

Krishnan said that raising capital is not a constraint for the bank, and that the government has so far infused close to ₹2,400 crore in two rounds. “We are looking at various options for capital infusion such as rights issues, and perpetual preferential shares,” he said.

On the NPA position, he said the bank was well positioned with net NPA coming down to below 6 per cent vis-à-vis 6.83 per cent in the last quarter. Gross NPA was below 12 per cent, compared to 12.98 per cent. However, he added that bad loans in corporate and agriculture sectors are a cause for concern as the recovery is likely to be difficult due to favours announced by the government.

With a focus on bringing down NPAs, Krishnan said the bank has created a separate vertical with a pool of 1,200 officers to manage stressed assets of ₹5 crore and above at its corporate office in Bengaluru.

As far as financial parameters are concerned, the bank is in a strong position and the loan book will grow more in the retail sector than through its corporate exposure. This will ensure higher income, coupled with higher distribution of risk. “We have shifted our focus from high-asset model to asset-light model,” he said, adding that the bank is looking at a 3-5 per cent growth in the current fiscal as the total business stands at ₹4.7 lakh crore.

With the objective of maximising fee-based income, it has decided to partner with one more life insurance company, apart from LIC. It plans to have a tie-up with SBI Life on proof of concept (PoC) basis for their life insurance products. The bank will do PoC in three different zones such as Karnataka, Tamil Nadu and Kerala on a pilot basis before commencing insurance sales pan-India, he added.

Published on January 11, 2019
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