| Slow and Steady
Calcutta, Dec. 10: Bank of Rajasthan (BoR) has shelved the plan to increase its stake in Bharat Overseas Bank for the time being and has decided to expand its business in the south on its own.
Bank of Rajasthan has a 16 per cent stake in Bharat Overseas — next to Indian Overseas Bank, which holds a 30 per cent stake in the bank. Bharat Overseas is promoted by seven banks. The other stakeholders are Vysya Bank (14.66 per cent), Federal Bank (10.67 per cent), Karur Vysya Bank (10 per cent), South Indian Bank (10 per cent) and Karnataka Bank (8.67 per cent).
“We were keen on increasing our stake in Bharat Overseas through acquisition of Vysya Bank’s share. But the problem arose over the share-pricing formula. This has forced us to shelve the plan to increase our stake for the time being. However, we are keeping an eye on the matter and will enhance our stake at the right moment,” Bank of Rajasthan managing director K. M. Bhattacharya said.
With the deal having fallen through, Bank of Rajasthan has approached the Reserve Bank of India (RBI) for issuing more licences for opening branches in the south as well as other parts of the country.
“We have already obtained 30 new licences from RBI and are looking for more,” Bhattacharya added. It already has 375 branches across the country.
The bank, at the moment, is not interested in selling its stake to any foreign strategic investor.
“We had received an offer from a foreign bank about a couple of months ago. But the foreign banks want to put a large number of directors on the bank’s board. We are opposed to the idea,” Bhattacharya said.
Rumours of foreign investors eyeing Bank of Rajasthan has resulted in an upward movement of the bank’s scrip. The bank’s share closed at Rs 35.10 today.
The bank is also keen on increasing its presence in Punjab and Haryana as well as in the northeast.
The bank also has plans to enter into the life insurance business by 2005 when it attains a net worth of Rs 500 crore.
At present, the bank has a deposit base of Rs 5,229.24 crore and the advance portfolio is Rs 2,221.24 crore. The bank has achieved a net profit of Rs 60 crore in the second quarter of the current fiscal. Its capital adequacy ratio is 15 per cent.
The net non-performing asset of the bank is 8 per cent (Rs 160 crore) of the total advances and the bank plans to bring it down to 2 per cent within the next three years.