“As of now, I think the market is not very conducive,” he said.
“Though the other internal work is going on, we are yet to decide when to hit the market, so the timing has to be relooked into at this point. We are having all the necessary approvals... but the ultimate call on FPO will be taken later.”
As per the original plan, the bank was expected to raise Rs1,300-1,500 crore through sale of 64 million shares of `10 face value each. The issue was expected to hit the market by September-October.
RamaGopal said that he could not even comment on whether the FPO would happen during the current fiscal.
“The amount and other things, we will give you the details when we come to the market,” he said. The government shareholding in the bank currently stands at 80%.
Equity and debt markets have been facing high volatility due to a combination of domestic and global factors over the last few months.
High inflation and the subsequent policy rate hikes by the Reserve Bank of India have led to concerns of moderation in domestic growth prospects, while debt concerns from US and Europe have exacerbated the problem.
Apart from the follow-on issue proposal, Indian Bank is not seeking any further capital infusion from the government in the current financial year, as it is already well capitalised, he said. As on June 30, its capital adequacy ratio stood at 13.03%.
“No, we don’t get any recapitalisation from the government, because we have a very, very robust Tier-I of 10.53% and Tier-II of 2.50%,” he said. The bank also has a large headroom of Rs6,000-7,000 crore for Tier-II capital, but RamaGopal said that raising Tier-II capital would remain a function of the rates available in the market.
“The Tier-II is having a particular coupon, which has to be decided plus it has to be done when the bond market is favourable. I don’t want to unnecessarily to raise my cost by raising it when I don’t need it,” he said.
RamaGopal said that Indian Bank was looking to raise funds through its $1 billion programme, which it will employ through various tranches.
“One tranche of $500 million is being worked (out), and if spreads are favourable, we may do it anytime,” he said.
He said MTN funds would be raised and deployed as per client needs through its Colombo and Singapore branches.
Through a combination of debt and equity capital, Indian Bank aims to boost business growth 22-23% in 2011-12, with advances growing 23-24% and deposits rising 20%.
“First quarter I am on course. Second quarter, let me see how the system is going to be,” he said. He said in Apr-Jun, the growth was around 22-23%, and aims to grow slightly above the system during the full fiscal.
RBI’s indicative projection for credit growth in 2011-12 is 18% for the industry. RamaGopal said that the bank’s growth would be above the system, but the bank was not aiming for growth far in excess of industry levels.
“Our focus area... is on retail side, for credit and deposit side. We will be concentrating more on retail credit, along with micro, medium and small enterprises, agriculture, personal loans, home loans... Simultaneously, corporate credit will also be going on,” he said.
Currently, the bank’s loan book has equal share of retail and corporate advances. RamaGopal said that it was difficult to say whether lending rates would move up further, as it was linked to deposit rates and also depended on market forces. NewsWire18
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