Vijaya Bank chief P.P. Mallya (left) with executive director T. Valliappan in Calcutta on Saturday. Picture by Kishor Roy Chowdhury

Calcutta, Aug. 19: Bangalore-based Vijaya Bank is planning to go abroad during the current financial year.

“We have sought the approval of the Reserve Bank of India to set up our representative offices and branches in China, Hong Kong and Dubai. We also plan to set up an unit in Malaysia, but we have not filed any application for that as yet,” said Vijaya Bank chairman and managing director Prakash P. Mallya.

“We hope to get Reserve Bank’s approval for our proposed overseas ventures soon. After that we will approach the host countries. Hopefully, we will be able to open our first unit abroad during the current financial year,” he added.

The public sector bank also has major expansion plans back home. “We have applied for licences for more than 100 new branches, of which 12 will be in the eastern region — eight in Calcutta, two in Orissa and two in Jharkhand,” Mallya said.

The bank has done a total business of Rs 2400.52 crore in the eastern region during the first quarter of the current financial year, recording a 24.3 per cent year-on-year growth. Total deposit from the region grew 22 per cent to Rs 1647.11 crore and total advances increased by 29.68 per cent to 753.41 crore.

By March-end next year, the bank expects to mobilise a total deposit of Rs 36,000 crore and total advances of Rs 24,000 crore. As of now, the bank’s total business stands at Rs 48,000 crore, comprising deposits of Rs 30,000 crore and advances of Rs 18,000 crore.

“We expect to clock a net profit of between Rs 250 crore and Rs 300 crore for the current fiscal on a total business of Rs 60,000 crore,” Mallya said.

“Last year, our profitability suffered because of loss in treasury operations. We have decided to increase our lending portfolio to replenish loss in investment income,” bank’s executive director T. Valliappan said. The bank is focussing more on retail lending, which at present comprise 75 per cent of its total advances.

The bank is also planning to raise between Rs 500 crore and Rs 600 crore upper tier II capital from the market through an issue of perpetual bonds before the end of this year, Mallya said.

“We have recently raised Rs 254 crore lower tier II capital at an interest of 9.25 per cent and we still have room to raise another Rs 200 crore. But we will go for the upper tier II segment and raise between Rs 500 crore and Rs 600 crore before the year-end,” Mallya said.

The bank’s capital adequacy ratio, however, stands at a healthy 11.55 per cent, excluding the Rs 254 crore tier II capital. “We have raised the lower tier II capital to take care of our capital adequacy requirement in future in keeping with the credit growth,” explained Valliappan.

The bank’s tier I capital constitutes 78.7 per cent of its current capital adequacy. Tier I capital should not be less than 50 per cent of a scheduled bank’s CAR, according the RBI stipulations.

The public sector bank has on Friday raised the interest rates on its fixed deposit schemes above 90 days by 25-50 basis points. “We have also launched a Platinum Fixed Deposit Scheme offering a 7.75 per cent annual interest (8.5 per cent for senior citizens) rate. We have also introduced 5-year tax saving fixed deposits carrying an interest rate of 8 per cent,” Valliappan said.

Vijaya Bank is, however, contemplating to raise its prime lending rate further by 25 basis points from 11.25 per cent at present. “We had in May this year raised our PLR to 11.25 per cent from 11 per cent. We will review a PLR hike in 2-3 weeks. If there is any hike at all, it would be by 25 basis points. However, the bank’s board will have to approve any such proposal,” Mallya said.

Vijaya Bank posted a net profit of Rs 72.63 crore for the first quarter of the current financial year against Rs 126 crore for the whole of 2005-06.