IndusInd Bank MD Sobti unveils 3-year blueprint

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Following the change of top management, the Hindujas-controlled IndusInd Bank, kicking off a major restructuring, has decided to go for a global depository receipts (GDR) offering during the first quarter of the current fiscal. The bank’s plans include new lines of activities like wealth management, insurance broking, asset reconstruction and opening an overseas banking unit. Towards that end, the bank has decided to tap the market for capital at regular intervals.

Unveiling the three-year blueprint for restructuring of the bank, Romesh Sobti, the new managing director & CEO of IndusInd Bank, who was earlier heading ABN Amro Bank’s India operations, told FE: “We are undertaking a sweeping restructuring of the bank to grow our balance sheet and we need substantial capital for the exercise. To begin with, we will be hitting the international capital markets with a GDR issue during the first quarter of this fiscal.’’

Without further elaborating about the capital raising plans through GDR, Sobti said: “The size of the proposed issue is expected to be 10% of the bank’s current capital base.’’

The current capital base of the bank is Rs 320 crore. Sobti explained the bank plans to raise its capital in tranches over the next three years to fuel the rapid expansion of its balance sheet. “I have full commitment from the bank’s board and promoters of adequate capital to fuel higher growth. The bank would be infused with capital at regular intervals through various options over next three years. Next fiscal, we might go in for an another GDR issue, or even a rights issue is not ruled out,” he added.

The bank is expected to grow at 30-40% in future. ``This kind of growth will be normal for us as our base is lower,’’ he said. The bank’s proposed GDR issue would strengthen Tier I capital— which will, apart from improving CRAR, create enough room to raise further Tier II capital.

The proposed GDR issue during the current fiscal will be second one for the bank as the bank had raised $34 million through the instrument in March 2007.