"Our tier-I capital is Rs 1,000 crore and it is a problem servicing it. The plan is to convert it into a core capital of equity shares and preference capital," said chairman and managing director of Central Bank, KC Choudhury.

In the last quarter of the fiscal 1998-99, the bank raised Rs 300 crore through bonds which added to its tier-II capital. As on March 31, 1999 the public sector bank's capital adequacy ratio was 11.88 per cent, up from the previous year's 10.40 per cent.

The bank is not planning to float a public issue until before the fiscal 2000. "We have to see our March 2000 balance sheet, before we take any steps," he said. The total capital and reserves of the bank an on March 1999 was Rs 1,717 crore compared to Rs 1,622 crore in 1997-98.

The Central Bank has Rs 800 crore of accumulated losses that it carries on its balancesheet. The bank reported lowered profits of Rs 146.25 crore in 1998-99, down from the previous year's Rs 174.89 crore. This fiscal the bank had targeted Rs 9,000 crore business growth. The bank is expecting deposit growth by Rs 6,500 crore and advances by Rs 2,500 crore. Last year its deposits were Rs 30,649 crore and advances Rs 12,800 crore. The bank is currently focussing on retail savings bank deposits as its core source of funds. These deposits at present form 31 per cent of its total deposit base.

"We plan to increase it to 35 per cent in the next two years," Choudhury said.

The cost of funds for the bank was 2.82 per cent last year, a scarcely perceptible improvement from the previous year's 2.89 per cent. The net non-performing assets (NPA) of the bank is around 8 per cent of its net advances. "We were hit most by the steel accounts and advances to the textile industry -- particularly the yarn sector," he said.

Last year the bank approved proposals worth Rs 1,400 crore to the infrastructuresector, disbursals for which would be made this year. The sectors include power, ports and roads.

The bank also has substantial exposure to electricity boards. "But we have no problems with their accounts," he said. The bank has identified branches for handling large coprorate accounts which will be managed by a general manager (corporate), specially appointed for the purpose. According to Choudhury, some of the existing branches will be designated as personal banking branches and deal with only personal loans, including loans for housing.