Allahabad Bank executive director S. K. Goel (right) in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, April 5: The Reserve Bank of India has allowed foreign institutional investors and non-resident Indians to invest in Allahabad Bank?s second public issue, which opens on April 6.

However, the central bank has imposed a rider on FII investment, which says, post-issue, the FII/NRI equity holding in the bank should not exceed 20 per cent of the paid-up capital. The bank had not offered its shares to FIIs during its initial public offer one-and-a-half years ago.

The bank management is confident of getting big investments from FIIs based on the response it has received from roadshows conducted abroad.

Bank officials said most of the FIIs that have operations in India are keen to invest in the second public offer.

The bank has conducted roadshows in Hong Kong, Singapore, Dubai and the US. Japanese investors from Singapore and Hong Kong have also enquired about the bank?s public issue.

The offer comprises net issue to the public of up to 8 crore equity shares of Rs 10, a reservation for employees of up to 1 crore equity shares and a quota for existing shareholders of up to 1 crore shares. The issue would constitute 22.38 per cent of the fully-diluted post-issue paid-up capital of the bank.

The price band has been fixed at Rs 75-82.

Post-issue, the capital adequacy ratio (CAR) of the bank will be 15.48 per cent. As on March 31, 2005, the CAR of the bank stood at 13.25 per cent.

S. K. Goel, executive director of the bank, said the government?s holding in the bank will come down to 55.23 per cent after the issue.

Regarding the employees? decision to call a strike on April 6, when the issue opens, Goel said the All India Bank Employees Association and Bank Employees Federation of India have decided in-principle to protest government stake dilution in any public sector bank. Meanwhile, the bank has decided to invest Rs 300 crore in technological upgradation.

Branch merger

Allahabad Bank has drawn up plans to close down or merge some of its loss-making branches.