Union Bank of India plans to raise equity capital of Rs 1,386 crore by as early as July. The public sector lender is seeking shareholders’ nod at its annual general meeting on June 27 for raising the fund by issuing equity shares through a qualified institutional placement (QIP).
Arun Tiwari, chairman and managing director, said the market sentiment was good and likely to get better for fundraising after the Bharatiya Janata Party-led National Democratic Alliance won a decisive mandate under Narendra Modi in the Lok Sabha elections.
The Bank is looking to tap the market in the second quarter (July-September 2014) of current financial year. The money raised through QIP should improve capital adequacy by 50 basis points, he said. Tiwari was speaking to media persons after launching ‘Tabulous Banking’, a tablet-based Savings Bank account opening process.
It is first public sector bank to use tablets to open savings account where bank officer feds details into tablet, clicks photograph, takes snapshot of the original KYC document and uploads it. The time taken for opening account is maximum 24 hours under this initiative.
The Mumbai-based bank’s capital adequacy under Basel III was 10.80 per cent with tier I of 7.54 per cent at end of March 2014. The government holding in the bank was 60.13 per cent at end of March.
Besides raising money via QIP, bank is internally conducting review of usage of credit lines by borrowers to free up capital. The amount of capital to be set aside is linked to usage of credit.
Tiwari said till date bank has been able to release capital to the tune of 11 basis points after review of loans worth Rs 80,000 crore in seven-eight branches. Now, this exercise would be carried out in 200 more branches. The total capital that would get released is expected to be 40 basis points, another Union Bank executive said.