IndusInd Bank plans to raise Rs 300 crore through tier-II bonds in the home market, which would help the bank shore up its capital adequacy to 14%. The Hinduja-owned bank will also take advantage of the Reserve Bank of India’s policy to allow banks to open branches in semi-urban and village areas and will open 50% of its targeted branches in those areas in the North East, north, west and south. The private sector lender enjoys 13.84% capital adequacy ration (CAR) currently.
?We are currently concentrating on internal capital formation and plan to raise Rs 300 crore through tier-II bonds in next 30-60 days. We are now looking for only organic growth,? Romesh Sobti, managing director & CEO, IndusInd Bank told FE.
In August 2009, IndusInd Bank raised Rs 480 crore by selling 13% stake via the qualified institutional placement route. As per RBI?s guidelines, banks are required to maintain minimum 9% capital adequacy ratio, together as tier-I & -II capital.
The bank has embarked on an expansion plan of adding 120-150 more branches by March 2011 to its existing kitty of 210 branches pan India. As per the latest RBI regulations, banks do not need to seek the regulator?s nod to open branches in smaller towns and large villages, the so-called tier-III to VI centres with population below 50,000. The central bank also permitted private and public sector banks to open branches in rural, semi-urban and urban centres in north eastern states and Sikkim without its approval.
?We are expecting a credit growth of 25-30% by FY2011 end. Our credit growth will be evenly distributed across corporate and consumer lending, including vehicle financing,? said Sobti.
The bank attained a loan growth of 33% in the December quarter, 2009. IndusInd Bank, according to the managing director, is registering good growth in auto loan segment in between 15% and 20% depending on the product category whether two-wheelers or commercial vehicles. ?The sectoral growth is evenly distributed in our book. The pull is pretty uniform,? Sobti observed.
In proportion to its expansion plans, the Mumbai-based lender has also intensified its hiring spree. By the end of next fiscal, it plans to hire 700 people for branch banking and 900 in consumer banking.