IDBI Bank may raise funds via rights issue, FPO

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Mumbai: As part of its capital restructuring plan, state-owned IDBI Bank plans to raise funds through a combination of a rights issue and a follow-on public offer (FPO) in the next year. In the bank, the government owns a 52 percent stake, which cannot be diluted.

"I am in talks with the government for raising capital next year, which will be partly through a rights issue and partly through FPO while maintaining the government?s 52 percent stake," said IDBI Bank chairman and managing director Yogesh Agarwal. He added that the bank doesn't have need for capital at the moment, as its capital adequacy ratio (CAR) is at 14 percent, well above the central bank's stipulation. However, the bank will need additional funds next year to meet Basel II norms and carrying out its expansion plans.

Details about the FPO and rights issues are being worked out between the bank and the government and are yet to be disclosed as the scheme is waiting to get approved. IDBI Bank had brought out its initial public offer (IPO) in 1999.

IDBI Bank has also tied up with Motilal Oswal Securities (MOSL). Through this initiative, the bank plans to take online trading services to tier-II and tier-III cities. The facility will be open to customers of 120 branches. The customers need to open a three-in-one account, comprising of a savings account and demat account with IDBI Bank and a trading account with MOSL. IDBI's subsidiary, IDBI Capital Market Services, is already offering a similar service to the customers of IDBI Bank.

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