Allahabad Bank looking at raising capital next fiscal; weighs options to dilute stake in insurance JV, sell non-core assets

Kolkata: City-based Allahabad Bank, which had recently come out from the prompt and corrective action (PCA) after RBI removed it from the weak bank watch list in February, is looking ways to raise capital in the next financial year, an official said. The bank would be weighing the options of dilution of stake in the general insurance joint venture (JV) Universal Sompo and sell off non-core assets like properties in places like Mumbai, MD and CEO of Allahabad Bank S S Mallikarjuna Rao told reporters here on Friday. “Allahabad Bank has come out of the PCA. It is only the starting point”, Rao said, adding that this had happened due to infusion of capital by the government as some conditions relating to net non-performing asset (NPA) and CRAR were breached", he said. [caption id=“attachment_4469065” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Rao said that net NPA of the bank had fallen below six percent, adding that recovery would be the mainstay for further lowering of NPA. “Expecting that the bank would book profits in 2019, the capital infusion by the government was for meeting regulatory requirements. However, some growth capital is also needed but we are not worried about that”, Rao said. As per Securities and Exchange Board of India (SEBI) requirement, there was still headroom for the government to dilute stake in the bank, Rao said. He said that the bank was having 12 properties which were identified, adding that the bank was targeting to raise Rs 250 crore to Rs 300 crore by selling the non-core assets, like properties. Allahabad Bank and others like Indian Overseas Bank, Karnataka Bank and Dabur which had formed the non-life insurance company Universal Sompo had already appointed a consultant for the valuation of the JV. “Efforts will continue to get capital out of Universal Sompo and also from selling off non-core assets like properties”, Rao said. On the whole, he said that the bank would be looking at raising Rs 500 crore probably in the next fiscal by way of Universal Sompo stake dilution and sale of non-core assets. Chairman of Universal Sompo O N Singh said that the insurance JV stated with an initial capital of Rs 150 crore and was making profits. The JV launched a co-branded health insurance product exclusively for Allahabad Bank customers. Singh said that the exclusive co-branded product would help Allahabad Bank to raise its savings accounts deposit base.