Allahabad Bank seeks Rs 1,000 cr from govt, may raise Rs 1,500 cr via bonds

Allahabad Bank’s capital adequacy ratio stood at 10.45% as of March 31, 2015, as per Basel-III norms

Public sector lender Allahabad Bank has sought a capital infusion of Rs 1,000 crore from the Centre for the current financial year, chairman & managing director Rakesh Sethi said on Friday.

Separately, the lender may also raise up to Rs 1,500 crore through bonds to boost its capital adequacy.

“We have made a representation (to the finance ministry) for a capital support of Rs 1,000 crore for 2015-16,” said Sethi during the bank’s 13th AGM.

He said the ministry has asked the bank to submit its plan for the next five years after which it will take a view on the request.

“In addition to the capital support, we have plans to raise another R500 crore under Tier-II Basel-II-compliance bonds,” he said.

The bank may also raise up to R1,000-crore tier-I capital through bonds, provided it is available at a reasonable cost.

“Reasonable cost would be in the range of 10-11%. As on the date, there is not much demands for such papers, but, going forward, as the economy improves and credit demand increases, I am sure such a market will develop,” said Sethi.

He said the bank is currently adequately capitalised. Its capital adequacy ratio stood at 10.45% as of March 31, 2015, as per Basel-III norms.

During the AGM, Sethi said the bank will focus on retail banking and NPA reduction. “If we get the opportunity, we will sale bad loans to ARCs,” he added. The gross NPA to gross advances of the bank stood at 5.46% at the end of last fiscal.

During the last financial year, the bank closed its representative office in Shenzhen in China. Currently, the public sector lender has one overseas branch in Hong Kong.

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First published on: 27-06-2015 at 00:36 IST