The Central Bank of India?s proposed right issue of Rs 2,500 crore will hit the Street in the last quarter of the fiscal.
The bank has already obtained approval from the government of India and is now waiting for the nod of Reserve Bank of India (RBI) for the issue.
According to R K Dubey, executive director, CBI, the bank got approval from RBI in November.
?RBI?s approval can come any time and the bank is expected to launch the issue in the January-March quarter,?? he said . The bank is in advance stage of preparation for its proposed right issue and will soon finalise the selection of 5-6 merchant bankers. The proceeds will be used to maintain bank?s capital adequacy ratio (CAR), he said.
Under Basel II norms, the lender enjoys a CAR of 11.65% wherein tier I capital is at 6.08%. After the right issue, its tier I capital is expected to go up to 8%. Bank?s loan book has been growing at 25% y-o-y in 2010-11 and the total credit will cross Rs 1 lakh crore. It aims to achieve 23% loan growth in 2010-11.
The bank, which expects its cost of borrowing to go up to the tune of 50-75 basis points after the hike in deposit rate by 75-175 basis points announced on last Thursday, is planning to build a marketing set-up to intensify its cross-selling and thereby to increase its fee-based income. It is currently in the process of selecting 400-500 people from its existing staff to form such a team. Additionally, CBI will recruit 1100 probationary officers and 100 executives with MBA background in the month of January.