Central Bank to raise upto Rs 3,000 cr capital from markets; to come out with repo-linked retail products in September

State-run Central Bank of India is planning to mop up around Rs 3,000 crore in core capital from markets in the next two months, Pallav Mohapatra, managing director and chief executive, said.  This capital is excluding the fund infusion that is likely to come from the government, he told reporters on the sidelines of the annual industry conference Fibac in Mumbai on Tuesday. “We want to raise Rs 2,000-3,000 crore from markets apart from what we get from the government,” he said, adding the money will be raised in the next two months either through a follow-on offer or a qualified institutional placement, a PTI report said. The bank has also made a funding request to the government from the Rs 70,000-crore it has budgeted, Mohapatra said, refusing to disclose how much they have asked for. He said the bank expects the money from the government to flow in by September and added that its capital raising plan from the market does not hinge on it. The money will be raised in tranches from the market. [caption id=“attachment_7197471” align=“alignleft” width=“380”]  Representative image. Reuters[/caption] The city-based bank is targeting a credit growth of 10 percent during the fiscal, he said, adding the demand is expected to pick up in the second half. It is expecting a credit growth of up to 15 percent in the retail, agriculture and small businesses, while corporate will be slower, he said. “As of now, credit growth coming from retail. There is demand in MSMEs, roads, renewables. In a few months from now, manufacturing also will be there,” he said. Mohapatra said the bank will be coming out with repo- linked loans by September end in the retail segment for new loans and existing borrowers can also switch to the new lending benchmark for a fee. On the government commitment of state-run banks buying out Rs 1 trillion worth of loan portfolios from the troubled NBFCs, Mohapatra said he will move the board with a request towards this next month. In an exchange notice earlier, the Bank said that it had received shareholder approval to raise up to Rs 5,000 crore through rights issue or qualified institutional placement (QIP). Meanwhile, Mohapatra said the bank will come out with some repo-linked retail products by September this year, according to a report in CNBC-TV18. This move comes after Reserve Bank of India (RBI) Governor Shaktikanta Das yesterday said the central bank will take steps to formalise linking new loan rates to external benchmarks.

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In an interview to CNBC-TV18, Pallav Mohapatra, managing director and chief executive officer, said, “The new products will be only for the new customers. For existing customers when their reset has to happen, then the option is with them whether they want to continue with the marginal cost-based lending rates (MCLR) linked or they want to opt for repo linked.” --With PTI inputs