Kolkata: Allahabad Bank is likely to raise Rs500 crore in debt to maintain capital adequacy ratio (CAR) above 12% from March 2008 when the new risk provisioning norms (Basel II) come into effect.
“We are likely to raise Rs500 crore from the market in tier II capital (bonds) by September to maintain the CAR above 12% for the year 2007-08,” Allahabad Bank chairman and managing director A.C. Mahajan said on Thursday after signing an MoU with Franklin Tempelton Investments.
The bank has headroom for Rs650 crore in lower tier II and Rs950 crore in upper tier II capital such as perpetual bonds, taking the total to Rs1,650 crore.
The present CAR of the bank is 12.5%, Mahajan said.
He said the bank has launched reverse mortgage product in select markets, but not on a large scale. The rate of interest for the product has been kept at 11%.
Mahajan felt that the interest rate was likely to ease from September onwards given the present circumstances.
“The troubled areas are easing. Inflation is under control and there is adequate liquidity in the market. The returns on commercial paper on G-sec are coming down in the recent weeks,” he said.
The bank was looking at a credit growth of 22%, deposit by 18-20% and operating profit by 20-25% for the current fiscal year.