``The new subsidiary will offer all services related to shares, debt securities, private placement, broker financing and demating,'' NS Gujral, executive director, Corporation Bank, told UNI.

Considering that capital market services is a ``very risky business'', Gujral said the bank will adopt a cautious approach in its expansion.

In the first phase, the new subsidiary will have its headquarters in the commercial centre - Mumbai. It will gradually spread to other metros, he added.

Gujral who recently took over as the new ED of Corporation Bank did not provide details on the paid-up capital nor if any partnership is mooted for the new company. ``The board will take up the new proposal soon. It will decide the size of the company and determine whether the joint venture route is needed.''

The bank's decision to set up a new company to cater to capital markets comes in the backdrop of a buoyant stock markets and the need of the public sector bank to broadbase its revenues from interest-based income to fee related activity.

The new subsidiary planned will be in addition to Corporation Bank Homes Limited, launched last year, and one in the offing for primary dealership. Corporation Bank has already got in-principle approval from the RBI for a Rs 75 crore company to enter the growing government securities market. The bank has also received permission to launch gold deposit scheme. It plans to start assaying units in collaboration with other banks, Gujral said.

The bank's turnover in precious metals - gold and silver - aggregated to Rs 5,675 crore as on March 31, 1999 as it embarked upon an aggressive marketing strategy in trading in imported gold.

Meanwhile, top bank sources said that parleys are on to locate suitable foreign partner(s) in its planned insurance foray. ``We will be ready with our agreements by the time the parliament passes the IRA Bill,'' they added.

Also, the bank plans to raise fresh funds in January or February next year in its bid to keep the capital adequacy ratio always above the 11 per cent against the RBI stipulation of 10 per cent by March 2000. Two important elements are yet to be decided -- whether the bank would opt for a debt or an equity issue and what would be size of the public offer.

``There are no plans for private placement,'' the sources added.

The capital to risk adjusted assets ratio (CRAR) stands at 13.2 per cent as on March 31, 1999 against RBI norms of eight per cent. The Tier I component of CAR works to be 12.8 per cent as on that date. The funds are expected to fuel its modernisation drive with emphasis on ATMs, telebanking and anywhere banking. As on date, the bank has fully computerised 264 branches covering 80 per cent of its total business.

``The thrust would not be towards branch expansion as we have realised investment in latest technology will increase profits faster,'' sources said.