AllBank to cut merchant bank arms capital base

Kolkata, March 21 | Updated: Mar 22 2006, 06:16am hrs
Allahabad Bank, which is planning to venture into the insurance business, has found out a unique way to capitalise itself. The Kolkata-based bank is in the process of restructuring the capital of Allbank Finance Ltd, that will see the equity base of its subsidiary shrunk from Rs 60 crore to Rs 15 crore. An application to this effect has already been submitted with the Company Law Board.

The reason behind the move to reduce the capital base by 75%, is that the reduced capital base of Allbank Fin will be more than adequate to carry out the merchant banking activities, for which it got the permission from the Sebi last year. The written-off capital base will now be ploughed back, to fund the Banks new business opportunities, namely insurance.

Since carrying out the merchant banking activities do not require a capital base of more than Rs 10 crore, we have decided to bring down Allbank Finances equity to Rs 15 crore, and pump the balance Rs 45 crore to new business opportunities, Subodh Kumar Goel, ED of Allahabad Bank told FE.