| V. P. Shetty in Calcutta on Monday. A Telegraph picture
Calcutta, Sept. 1: Uco Bank is negotiating for higher interest rates on its Rs 790 crore investment in IFCI and Industrial Development Bank of India (IDBI), chairman and managing director V. P. Shetty today said.
“We had received a proposal for restructuring of maturity period and interest thereon from both IFCI and IDBI and we had submitted a counter-proposal seeking higher interest rates on our investment,” he said.
Shetty also said their negotiations with IDBI were nearly finalised, but the details with IFCI had to be worked out. “The issue will be resolved soon,” he added.
The bank had invested Rs 340 crore in IFCI and Rs 450 crore in IDBI under the narrow banking regime. The investments in IDBI will mature in 2007.
IFCI’s restructuring proposal entails conversion of 50 per cent of non-statutory liquidity ratio (SLR) liabilities into zero coupons. Optionally, convertible debentures will be payable after 20 years and the interest rate will be reduced to 6 per cent on the remaining 50 per cent of non-SLR liabilities with effect from April 2002 and the same can be reinvested for another 10 years from the respective dates of maturity at an interest rate of 6 per cent.
Shetty said in view of negotiations with IFCI, the bank had fully provided for the interest differential for 2002-03 and no interest was being booked on accrual basis with effect from April 2003.
IDBI had also given a proposal for rollover of the bank’s investment, he said.
Shetty expected that the bank's initial public offering (IPO) opening on September 3 would receive a good response from banks and financial institutions (FIs).
“We have already made a presentation to all leading FIs and banks and also one-to-one interaction with chiefs of some and expect to get a favourable response from them,” he said.
Ten per cent of the total offering has been reserved for employees. Non-resident Indians (NRI) could also participate in the issue on a non-repatriable basis.
The offer document which Uco had filed with the Securities and Exchange Board of India (Sebi) did not speak about NRI participation in the IPO. Later, the bank has sought permission from the Reserve Bank of India to allow NRIs to participate in the IPO.