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Thursday, August 30, 2012

Karnataka Bank gets shareholders’ nod to raise authorised capital

Shareholders of Karnataka Bank have approved the resolution to increase the capital of the bank. The present authorised and paid-up capital of the bank is Rs 200 crore and Rs 188 crore, respectively.

At the bank’s 88th annual general meeting here on Thursday, the shareholders approved the proposal to increase the authorised share capital of the bank from Rs 200 crore to Rs 300 crore to facilitate further issue of equity shares.

Chairing the meeting, Ananthakrishna, Non-executive Chairman, said that the capital-to-risk-weighted assets ratio of the bank was at 12.84 per cent at the end of March 31.

To augment the capital, the bank may enter the capital market with an issue of equity shares.

Many shareholders, who attended the meeting, demanded that the bank issue bonus shares. Ananthakrishna said this would not help increase the capital of the bank.

To a query, P. Jayarama Bhat, Managing Director, said that the bank could not reach the agriculture credit target of 18 per cent in 2011-12. As a result, it has invested in RIDF (Rural Infrastructure Development Fund) of Nabard. (RIDF investment is seen as a penalty for banks that do not achieve agriculture credit target).

“We want to reduce investment in that. Now the bank has almost reached 15 per cent in agriculture credit. We hope to reach 18 per cent by the end of this fiscal,” Bhat said.

On the impact of issue of new licences on Karnataka Bank, Ananthakrishna said: “We are in the private sector. We are small and happy. Competition will be there. With your support and efficient workforce, we will face the competition.”


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