BackCanara Bank to get Rs1,500 crore fund infusion from LIC soon
The fund would be raised by issuing 4 crore shares through preferential allotment, says an official
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New Delhi: State-owned Canara Bank is likely to get fund infusion of up to Rs1,500 crore from the country’s largest insurance firm Life Insurance Corporation of India (LIC) next month.
“The fund would be raised by issuing 4 crore shares through preferential allotment and the capital raised would be utilised for business growth," a senior Canara Bank official said.
At the current market price, Canara Bank would be able to raise about Rs1,500 crore by issuing shares on preferential basis.
As of December 2014, LIC held 6.4% stake, or 2.95 crore shares, in the bank. The bank already has got in-principle approval from LIC for subscription of up to 4 crore shares. As per the approval letter from LIC, the official said, total exposure cannot exceed 15% of post issue capital of the bank at any point of time.
The board of Canara Bank has already given approval for issuance of preference shares. The bank would seek shareholders’ nod for the same on 30 April. After approval from the Extraordinary General Meeting, preferential issue in favour of LIC would be done, the official added.
For the third quarter ended December 2014, Canara Bank reported 60.2% increase in net profit at Rs655.92 crore despite increase in bad loans. The Bangalore-based lender had posted a net profit of Rs409.35 crore for the October-December quarter of 2013-14 fiscal.
The bank’s total income increased to Rs12,227.86 crore for the quarter under review from Rs10,935.29 crore in the year-ago period.
As far as asset quality of the bank is concerned, gross NPAs as a percentage of total advances rose to 3.35% from 2.79% in the same quarter a year ago. Its net NPAs went up to 2.42% from 2.39% at the end of December 2013. Gross NPAs in absolute terms rose to Rs10,573.57 crore as compared to Rs8,073.92 crore at the end of December 2013.
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