Indian Bank IPO post capital revamp, says CMD
Indian Bank has decided to hold its IPO till after the government permits its capital restructuring. This was stated by Dr K C Chakrabarty, chairman and managing director, Indian Bank.

Indian Bank has an equity base of Rs4,573.96 crore at present and its proposed restructuring involves setting off its accumulated losses of Rs3,830 crore against the capital.

This would bring down the banks's equity base to Rs743 crore. In addition, some capital would have to be returned to the government to reduce the equity further before an IPO can be made, he said.

After setting-off the accumulated losses, the bank already had a positive capital-to-risk weighted asset ratio (CRAR) of 14 per cent, which the bank would have to bring down to 11.5 per cent inclusive of reserves of Rs1,700 crore to be in line with the Basel II guidelines due for implementation from 2007.

Chakrabarty disclosed that the bank was likely to have cash recoveries of close to Rs500 crore this year, of which it had managed recoveries of Rs310 crore in the first nine months of the current financial year.

Of this, around Rs140 crore had contributed to the bottomline, pushing up its net profits. Net profit this year was likely to be close to Rs500 crore he added of which it had earned a net profit of Rs365 crore in the first nine months, up from Rs228.52 crore in the year-ago period.

The bank hopes to end the year with a gross business of around Rs 65,000 crore of which advances would be around least Rs22,000 crore this year. In the first nine months the bank had advances of Rs 21,751 crore, a 27-per cent increase over the year-ago period.

Chakrabarty said about 51 per cent of the advances were for priority sector and 21 per cent to the farm sector. These advances had earned the bank interest above 10 per cent per annum, yielding a net margin from farm advances of 4 per cent.

He also added that Indian Bank had a net NPA of 0.9 per while the gross NPA had been brought down from 21.83 per cent to 3.32 per cent from 21.38 per cent during.

The reduction, he said, was achieved through a combination of write-offs, provisioning and aggressive recoveries.

The bank had also entered in to a pact with the Pondicherry government to get 80 per cent of its population to open bank accounts with it. This pilot project, would eventually be extended to other states. On its IT initiatives, he said that the would connect 500 branches by this fiscal using TCS's banking solution.
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ADAG to enter commodities trading
Mumbai: Anil Ambani led Reliance-ADAG is getting into trading of commodities. R Trade Commodities — a commodity futures brokerage firm owned by Reliance Capital (RCL) — is all set to start trading in national bourses. At the same time, another group has been formed within RCL to explore the possibility of proprietary trading in local as well as foreign exchanges like Nymex and LME.

R Trade Commodities has taken memberships in MCX, NCDEX and NMCE — the three national exchanges in India. The group, which plans to subsequently evolve as a commodities trading desk, is currently with the treasury division of RCL led by former Vedanta official, Vikram Dhawan. Apart from him a few more professionals with a background in commodity trading have joined the group.

On receiving the government's approval the group is expected to invest in exchange traded funds (ETF) in commodities. The commodity market regulator Forward Markets Commission has reportedly favoured the entry commodity based mutual funds. Sebi is currently examining the issue.
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