Allahabad Bank seeks to mop up 300 crore from the dilution of the stake

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Allahabad Bank on Friday launched an online platform in its branches to issue a health insurance policy provided by Universal Sompo General Insurance.

Allahabad Bank, which was released from the Reserve Bank of India's Rapid Remedial Measures (PCA) framework last month, said Friday it intends to raise about 300 crore capital by diluting its stake in Universal Sompo General Insurance Company, which is a joint venture of the lender, in the next fiscal year to stimulate business growth.

"We are looking to maximize the dilution value of the stake in Universal Sompo and see how much we can derive from it. We are interested in anything around 200 to 300 crores of rupee after this dilution. How much we dilute the issue depends on the assessment we get and the need to go at that point. Even after the injection of government capital, we still need growth capital, "told the press SS Mallikarjuna Rao, general manager of Allahabad Bank.

"A consultant, Choice Capital, has already been appointed for the evaluation of Universal Sompo. Work is underway as it depends on the final March numbers to reach the assessment, "Rao said.

He added that if the government injects a capital of 6,896 crore into the bank, by the end of March this year, the lender will be able to reduce its net percentage of NPCs to the 6% mark, in accordance with the requirements of CRAR and CET-1. The bank expects it to be able to break even by June this year.

In addition to absorbing the capital resulting from the proposed dilution of the interest in its insurance joint venture, the bank also plans to raise approximately Rs. 300 million in the coming year by disposing of non-core assets such as land and property. . "Excluding PCA, if you plan growth until 2019-2020, we need the capital," Rao said. The lender expects credit growth of 8 to 10% over the previous year.

ON Singh, president of Universal Sompo General Insurance Company, said that just like Allahabad Bank, Indian Overseas Bank, also promoter of the Mumbai-based general insurer, was seeking to dilute its holdings. According to the 2017-18 annual report of Allahabad Bank, the Kolkata-based lender would own 28.52% of Universal Sompo's capital, alongside the Indian Overseas Bank, Karnataka Bank, Dabur Investment and Sompo Japan Nipponkoa, one of Japan's leading insurers.

Karnataka Bank has already diluted its stake in the company to around 6 percent, up from 14.26 percent last year, Singh said.

To answer a question, Rao said the exit from the PCA would be a starting point for Allahabad Bank as it reinforced the lender's responsibility to advance it in terms of the bank's performance. "The only benefit of lifting the PCA is that the enthusiasm of all staff is rejuvenated," he said.

Allahabad Bank on Friday launched an online platform in its branches to issue a health insurance policy provided by Universal Sompo General Insurance. Allahabad Bank Health Care Plus (ABHCP), a co-branded health insurance product, is exclusively designed by the insurance company.

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