Indian Bank looks to raise Rs900-cr via IPO
New Delhi: Indian Bank is looking to raise Rs800 to Rs900 crore from its maiden public issue which is likely to hit the market in January 2007. The bank has filed the draft red herring prospectus with market regulator Sebi for the proposed public offer of 85,950,000 shares of Rs10 each for cash at a premium to be decided through book-building process.

Bank officials said Indian Bank expects an increase of 17-18 per cent in business, 25-30 per cent in credit and 17-18 per cent in deposits in 2007.

Total business stood at Rs70,000 crore as of September 2006 and the net profit grew by 38 per cent to Rs334 crore in the first half of 2006-07.

Besides IPO proceeds, Indian Bank is also open to mobilise funds through other means like Tier-II bonds to support balance sheet expansion.

The capital adequacy ratio of the bank stood at 12.02 per cent and the additional capital mobilisation through the IPO was likely to give additional cushion to meet the Basel-II norms that requires banks to provide capital for operational risks, besides credit and market risks.
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Banks ask RBI for more clarity on takeout financing
Bangalore: Financial institutions have asked the Reserve Bank of India to provide detailed accounting guidelines on `takeout financing' (where one institution takes over the loan asset of another after an interval of time from date of the disbursement of the loan) for infrastructure. Among the accounting issues involved are treatment of the assets in the loan books of both the financiers for purposes of , `risk weighting'- a process that determines of what proportion of a bank's own capital as opposed to depositors' monies that should finance its loan assets- and provisioning for a possible loss from non-recovery of the assets. Bankers said the issue is whether the `risk weighting' and standard loan loss provisioning be made at the time of the agreement or when the asset is taken over.

Takeout financing is a contractual agreement, where the secondary financier agrees to buyout the assets at the end of a fixed term, at a predetermined price.
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