Corp Bank, BoB expecting govt funds next fiscal

Corporation Bank and Bank of Baroda (BoB) today said they are expecting significant amount of fund from the government's Rs 6,000-crore budgeted capital infusion plan for weak public sector banks for next fiscal.

"We will be getting Rs 309 crore this month from the government and some more in the next fiscal to improve our Tier-I capital which now stands at 8%. Post-central infusion, our equity capital will go up to 8.5-9% which would be a comfortable level," Corporation Bank Chairman and Managing Director Ramanth Pradeep told reporters on the sidelines of a banking technology seminar here.

Pradeep also said to drive asset growth, the bank has to increase its capital base, which would be done through the government intervention. "With the present equity capital base, we cannot grow our asset base faster," he added.

Meanwhile, BoB Chairman and Managing Director M D Mallya, too, said his bank is expecting a "significant amount of capital" from the Centre next fiscal.

"The government holding in BoB currently stands at 53%. We expect this to touch 58% after the government infuses funds into us, which would most probably be through a preferential share allotment," Mallya told reporters at the same summit.

In the Budget 2011, Finance Minister Pranab Mukherjee has made a provision for Rs 6,000 crore capital infusion in certain public sector banks which have low equity capital. The move is also to meet the government norm to take its holding in these banks to 58%.

Asked whether he is planning to raise any additional capital next fiscal, Mallya answered in the negative, saying he does not require additional funds now. He said, he was not keen on bulk deposits too.

Source: Business Standard