The Hindu Business Line : South Indian Bank mulls GDR issue

Dr V.A. Joseph, Chairman, told Business Line that the bank needed to raise capital because its capital adequacy ratio (CAR), at 9.82 per cent, is barely above the statutory minimum of 9 per cent.

Last year, the bank added Rs 1,200 crore to its portfolio of advances, taking the outstanding advances to Rs 5,727 crore at the end of the year. The `highest ever' growth in advances had its impact on capital adequacy.

This quarter, the bank will raise Rs 65 crore of Tier-II capital, which will take the CAR to 10.5 per cent. But when Basel-II norms for capital adequacy are applied, the CAR would slide to about 9.5 per cent. The bank has said that it would raise its networth from Rs 450 crore to about Rs 1,000 crore in two years.

Dr Joseph said that the target for the current year was Rs 16,000 crore against last year's achievement of Rs 14,250 crore. The bank's advances yield on an average 8.6 per cent, while its Rs 2,800-crore investment portfolio yields 7.6 per cent.

During the first quarter of the current year, the bank shifted securities worth Rs 620 crore from `available for sale' to `held to maturity', but incurred no depreciation costs because the market value of the securities were not at a discount to cost.

Dr Joseph said that the South Indian Bank was among the earlier old private sector banks to have implemented a core banking solution. Currently, 264 of its 480 branches and extension counters are networked.

The project, taken up in 2001, cost the bank Rs 40 crore.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rupee against dollar — It's fundamentals versus sentiment

Maharashtra to launch special insurance scheme for women

Insurers buying low-tenor securities

South Indian Bank mulls GDR issue

IRFC raises Rs 1,200 crore via loans, bonds

Banks see rise in revenue from cross-selling retail products