UTI Bank plans to hike Tier-I capital by 20%

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By The Telegraph Online
  • Published 16.11.02

New Delhi, Nov. 15 (PTI): UTI Bank is planning to raise around Rs 80-100 crore this fiscal for augmenting its capital adequacy ratio (CAR) to above 11 per cent from the present level which is a little over 9 per cent.

“We expect to raise the tier-I capital by 10-20 per cent this fiscal,” said bank officials, adding that it would be through preferential allotment.

At present, UTI Bank’s tier-I capital of equities, excluding the promoter’s stake, stands at over Rs 191 crore. It means that the bank will have to mop up in the range of Rs 20-40 crore.

They said the bank was having detailed discussion on the exact proportion of the equity to be raised.

Besides, the bank is also planning to borrow another Rs 60 crore this fiscal to further its tier-II capital. So far the bank had borrowed around Rs 100 crore. “We will review the situation whenever there is a demand,” they said.

The bank’s borrowings stood at Rs 1,245.81 crore last fiscal, up from Rs 9,092.2 crore in 2000-01. “With this exercise, the bank’s CAR will go up to over 11 per cent from a little over 9 per cent as of now,” the sources said.

Reserve Bank has stipulated a mandatory minimum of 9 per cent CAR for the banks and financial institutions.

The bank’s promoter, Unit Trust of India holds 41.71 per cent stake and the remaining is with the public.

Starting with a capital of Rs 115 crore, UTI Bank has embarked on branch expansion with a view to make its presence felt. The bank has already opened around 20 branches this year and is planning to open 25 more by March 31, 2003, taking the total number of branches to around 200.

Of the Rs 115-crore capital, the country’s largest mutual fund had invested Rs 100 crore, Life Insurance Corporation had put in Rs 7.5 crore and General Insurance Corporation and its four subsidiaries — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — had invested Rs 1.5 crore each.

Upbeat over the potential to increase its presence in the country, the bank will actively take up installing ATMs in post offices, sources said.

At present, it has only one such arrangement in Gol Dak Khana in Delhi. With proper system integration from India Post, the bank would be able to replicate the model across the country. It has 635 ATMs spread across 71 cities across the country.

The bank, which reported a net profit of Rs 86.12 crore in the first six months of this year, offers both retail and corporate services, including retail loans, corporate credit, forex services, investment banking, depository services and investment advisory services.