Public sector bank, Corporation Bank is planning a rights issue of about Rs 3,000 crore in H2 FY 11 to improve its loan-book.
JM Garg, Corporation Bank chairman and MD said, “We would like to raise capital of at least Rs 3,000 crore through a rights or follow-on issue in the second-half of FY 11”.
The bank required more capital to increase its loan-book from the present Rs 63,000 crore to Rs 80,000 crore.
Garg said, “Going forward, we need more capital and we may approach the Government for either a rights issue or a follow on issue — we will decide about this in H2 FY 11”.
During H1 FY 11, Corporation bank may not require any capital infusion, he said. He added, “In H2, we will start a dialogue with the Government and if they agree, we will raise the capital.”
About the interest rates prospect, Garg said, “rates at the moment are having an upward bias. But due to excess liquidity, I don’t think banks are in a position to increase lending rates.”
He added, “In Q1 FY 11, there may not be an increase in rates but going forward if inflation does not come under control as expected, the RBI may think of raising short-term rates. Then banks will also have to realign their interest rates accordingly. This may happen only from H2 FY 11”.
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