Rights issue to augment capital: Bank of Bikaner & Jaipur

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Rights issue to augment capital: Bank of Bikaner & Jaipur

In an exclusive interview with CNBC-TV18’s Ekta Batra and Reema Tendulkar, Supratik Chatterjee the Managing Director of Bank of Bikaner and Jaipur says that the issue, likely to rollout towards March-end, will be used to augment capital and presence in tier-I and tier-II sectors.

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Bank of Bikaner & Jaipur has received the Securities and Exchange Board of India's (SEBI) approval for the rights issues of about Rs 800 crore. Supratik Chatterjee the Managing Director of Bank of Bikaner and Jaipur, in an exclusive interview with CNBC-TV18's Ekta Batra and Reema Tendulkar, says that the issue is likely to rollout towards March-end and will be used to augment capital and their presence in Tier-I and Tier-II sectors.

"The Rs 800 crore raised will be used to augment our capital since we need to improve our Tier-I and Tier-II ratio," says Chatterjee. He also hints that a possible merger with State Bank of India is for the government to decide. 

Below is a verbatim transcript of Supratik Chatterjee's interview with CNBC-TV18's Ekta Batra and Reema Tendulkar. Also watch the accompanying video.

Q: Could you tell us what would your capitalization ratio stands at?

A: It should be somewhere in the range of 14.5%, and Tier-I will be in excess of 9-9.5%.

Q: Can you give us any more details?

A: The timeline is likely to be towards the last week of March.

Q: What will this Rs 800 crore be utilized for?

A: It is to augment our capital since we need to improve our Tier-I and Tier-II ratio.

Q: On account of pension liability, a lot of analysts were a little worried to the PSU banks. Could you tell us how much more you need to provide?

A: We have already moved in that and over the last two quarters we have been making provisions. So, we have absolutely no issues if we have to amortize it over a five-year period.

Q: What is the total amount that would come through in the next few quarters?

A: We have already done about Rs 150 crore or so. Over a period of five years, we need to do only about Rs 500 crore, which is not an issue at all.

Q: Can you just throw some light on the possible details of a merger with SBI?

A: It is too premature to tell you much. The State Bank of India has proposed to the government, and it is for the government to give permission. The State Bank of India has told the government that if it gives the permission, they can conclude the process by 12-18 months. There is nothing beyond that and it is for the government to take a call.

Q: There were also reports doing the rounds that a parliamentary panel has asked the government to actually assess reasons for rising NPAs of the entire SBI group. Any sort of concerns you have on the NPA front?

A: The State Bank Group's NPA situation is not majorly at variance with any of the other nationalized banks. It is fallout of the economic slowdown which we are going through and in fact, things are improving. With regards my own bank I can tell you in September, our NPA figures were around Rs 943 crore, today in mid-February it is around Rs 819 core. We expect that near March we will be able to improve the position further.

Q: Any kind of target that you are working with? How much you plan to reduce your gross NPAs or even your net NPAs?

A: It is an ongoing effort. The reason why it has gone up is also largely because agricultural accounts had to be classified on their NPA. The government had come out with program for agricultural debt release and debt waiver. The residual accounts where the farmers did not come forward to pay their contribution have been classified as NPA We have not received the contribution which the government has proposed.