Chennai-based public sector lender Indian Bank?s plan to go for a follow-on public offer (FPO) to raise Rs 1500 crore is on track, said T M Bhasin, chairman and managing director, Indian Bank. Clearing the air over the possibility of the bank delaying the schedule for the FPO on the back of a slew of PSU companies postponing their FPO plans, he said the bank will file the draft red herring prospectus (DRHP) with market-regulator Sebi by mid-May and is hoping to hit the market by July.
?The FPO proceeds will be utilised for scaling up capital as well as to augment loan books. We will also be filing prospectus with the concerned regulatory authorities for its proposed foray into life insurance and mutual fund businesses?, he said. While bank?s tier-I capital stands at 6%, the tier-II capital was at 2.3% which prompted the bank to raise the capital.
?We have enough headroom to raise tier-II capital almost to the tune of Rs 600 crore. Though we could have gone for subordinated convertible bonds issue, our board had decided to go for FPO. The main reason for this is that raising funds through bonds is costly at this point of time looking at the prevailing coupon rate. Our captial reserves will be scale up to somewhere between Rs 3000 crore and Rs 3500 after the FPO which will take care of our credit disbursal requirements for at least one and half years?, Bhasin said.