Fund raising to improve CAR to 14.50%: Lakshmi Vilas Bank

Ekta: Can you detail us in terms of how much you have raised via your rights issue and what the fund utilisation would entail?A: Our rights issue closed on August 22 and we had raised Rs 406 crore. The rights issue was issued at the rate of Rs 50 including premium of Rs 40 and we have got a very good response from the shareholders and the issue was oversubscribed 1.12 times. So now with this Rs 406 crore, our net worth will become Rs 1,274 crore and the capital has increased from Rs 98 crore to Rs 180 crore.Ekta: What is your capital adequacy ratio and what is your tier-I and tier-II?A: As on June 30, our capital adequacy ratio was 10.5 percent and tier-I was 7.70 and 2.80 was the tier-II capital. So now with this increase, our capital adequacy, it will work out to 14.50 percent and the business growth, which we are targeting now - with this capital which additional capital we have raised, it will be sufficient for another two years.

Ekta: What is the credit growth that you are envisaging for FY15 and which are the segments that you would be focusing on?A: In fact, currently also, our retail and SME portfolio is around 72 percent and only 28 percent is the large corporate. So as a strategy we have decided is that gradually we will increase our retail and SME portfolio from 72 percent to 80 percent. Last year infact, we had opened 71 new branches. So the branch strength now stands at 361 and all these branches were opened during Q4. So with that we are expecting a credit growth of minimum 20 percent because all these branches which were opened last year will start contributing this year and with our restructuring some of the products - we have made our retail products quite consumer friendly. With that we will be able to achieve minimum growth of 20 percent both in deposits and advances.Ekta: Your asset quality improved in the quarter gone by on a sequential basis. Your gross NPA stood at 3.96 percent, what resulted in the improvement and what are the asset quality trends that you are working with for the banks for example, your slippages, your restructured loans, anything that you have sold to asset reconstruction companies as well?A: Due to some reasons because about 2-3 years back we did major advances in large corporate and then there was a recession. So as a result, our NPA had increased to 5.6 percent as on December 31. But then recently we have strengthened our recovery department, we have strengthened our monitoring department. So as a result, sequentially our NPAs have started coming down. So from 5.60 as on March 31, it came down to 4.19 and again it has come down to Rs 3.92. With this trend, we had done some restructuring also but no NPA was sold to ARCs during these two quarters. Without any sale of NPAs to ARCs, we were able to reduce the NPA level and with this trend, we are targeting that by March 31, 2015, our gross NPA will come below 3 percent. So the asset quality is now improving and with the growth which the country is looking for - 5.5-5.7 percent with that also asset quality will improve. So we are expecting a reduction in NPAs both in absolute terms as well as in percentage terms.Ekta: Gross NPA below 3 percent by end of FY15?A: Yes because we are around 3.94 percent and both ways, absolute terms also it will reduce and denominator will also increase. 20 percent growth we are targeting. So with that we will be able to reduce it to below 3 percent.