United Bank hopeful of government nod for capital restructuringFebruary 28th, 2009 - 6:38 pm ICT by IANS
Kolkata, Feb 28 (IANS) City-based public sector lender United Bank of India (UBI) is hopeful that the government would approve its proposal to reduce equity capital by March 31, a top official said here Saturday.
“We believe the finance ministry will approve our capital restructuring proposal by the end of the current financial year,” S.C. Gupta, chairman and managing of the bank, told reporters on the sidelines of a programme.
To raise the capital adequacy ratio (CAR) of the bank to over 12 percent from its current 11 percent, the government, in the interim budget, approved Rs.2.5 billion (Rs.250 crore) recapitalisation support to the bank, to be given out in phases.
UBI in December submitted a capital restructuring plan that proposed reduction in its paid-up equity capital to Rs.2.66 billion (Rs.266 crore) from the present Rs.15.32 billion.
“In the proposal, we have asked for transfer of Rs.1,156 crore (Rs.11.56 billion) of equity to general reserves and conversion of another Rs.110 crore (Rs.1.1 billion) to perpetual debt,” Gupta said.
The capital reduction would help UBI come up with an initial public offering of shares, he added.
Asked whether the bank was planning any rate cut, Gupta said the asset-liability committee of the bank was yet to decide on it.
“We have already knocked downed our interest rates to 12.75 percent from 14.25 percent over a span of two months and we are yet to decide on further cuts,” he said.
However, he did not rule out further rate cuts in the next month.