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Bank of Baroda (BoB) has sought Rs 1,800-crore capital infusion from the Government for the current fiscal (2013-14).
The Government has a stake of 55.4 per cent in BoB, which is currently the third largest public sector lender in the country.
“We have sought a capital infusion of Rs 1,800 crore. It is likely to be through preference shares,” S.S. Mundra, Chairman and Managing Director, BoB, told newspersons on the sidelines of the Federation of Indian Chambers of Commerce and Industry (FICCI) Banking Conclave.
Other available options for capital infusion include rights issue, Mundra said.
As on end-June, BoB had a capital adequacy ratio (which is a measure of a bank’s capacity to meet its time liabilities and other risks) of 12.70 per cent.
Although there is “enough room available” for raising Tier II capital, the bank would do so only after the market stabilises, he said.
Following a slowdown in loan demand from corporates and decline in new investments, the bank is eyeing retail, agriculture and micro, small and medium enterprise (MSME) sectors as growth areas. In retail, the bank will focus on home and auto loans.
Retail comprises 16-17 per cent of its total loan portfolio. And, agriculture and MSMEs, 14 per cent and 23 per cent, respectively.
According to him, the corporate portfolio is expected to grow at only 2-3 per cent.
The Government has a stake of 55.4 per cent in BoB, which is currently the third largest public sector lender in the country.
“We have sought a capital infusion of Rs 1,800 crore. It is likely to be through preference shares,” S.S. Mundra, Chairman and Managing Director, BoB, told newspersons on the sidelines of the Federation of Indian Chambers of Commerce and Industry (FICCI) Banking Conclave.
Other available options for capital infusion include rights issue, Mundra said.
As on end-June, BoB had a capital adequacy ratio (which is a measure of a bank’s capacity to meet its time liabilities and other risks) of 12.70 per cent.
Although there is “enough room available” for raising Tier II capital, the bank would do so only after the market stabilises, he said.
Following a slowdown in loan demand from corporates and decline in new investments, the bank is eyeing retail, agriculture and micro, small and medium enterprise (MSME) sectors as growth areas. In retail, the bank will focus on home and auto loans.
Retail comprises 16-17 per cent of its total loan portfolio. And, agriculture and MSMEs, 14 per cent and 23 per cent, respectively.
According to him, the corporate portfolio is expected to grow at only 2-3 per cent.
Overseas foray
Ruling out an immediate foray into new markets overseas, Mundra said the bank’s primary focus would be to strengthen its presence in the existing markets where he sees enough business opportunities that BoB can tap.
Present in 24 countries, nearly 30 per cent of BoB’s business and around 28 per cent of its revenues come from overseas operations.
“In many countries, the entry level capital requirements are increasing, and the regulatory environment is challenging. So, the emphasis will be to grow in countries where we are already there and have satisfactory operations,” he added.
According to Mundra, there are no plans for closure of foreign branches and repatriation of capital.
abhishek.l@thehindu.co.in
Source: thehindubusinessline
Present in 24 countries, nearly 30 per cent of BoB’s business and around 28 per cent of its revenues come from overseas operations.
“In many countries, the entry level capital requirements are increasing, and the regulatory environment is challenging. So, the emphasis will be to grow in countries where we are already there and have satisfactory operations,” he added.
According to Mundra, there are no plans for closure of foreign branches and repatriation of capital.
abhishek.l@thehindu.co.in
Source: thehindubusinessline
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