Current mkt not suited for raising funds: Karur Vysya Bank

Despite an approval to raise Rs 1,000 crore via qualified institutional placement (QIP), Karur Vysya Bank does not see the current market scenario apt to do so. K Venkataraman, its MD and CEO, says that the enabling resolution has been passed through a vote, but the timing of the QIP will be decided based on improvement in the market conditions within a year.

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Below is the edited transcript of his interview to CNBC-TV18.

Q: Can you take us through the news that you will be looking to raise money via qualified institutional placement (QIP) worth around Rs 1,000 crore?

A: This is basically to shore up our capital for Basel III. Right now we are not in any great need for capital. The resolution which we went on was to have an enabling resolution and then choose the timing.

Q: So, the QIP will not happen in the near future but you have taken an enabling resolution for the same?

A: That is right.

Q: Is there a timeline on when to expect the QIP? Or is that not a priority now?

A: There is no timeline. We are looking at more opportune time. Instead of going to the market when I need the capital, it is better we choose the time when the market is more rewarding and then go on to raise as the enabling resolution is valid for about a year. We can always look for good time for raising this.

Q: What is your current capital adequacy ratio stand at?

A: 12.8.

Q: Would you consider raising money under a different route or would it just be a QIP?

A: QIP is what we have thought about. So far, the bank has been only on right issue for smaller amount. We thought we may need slightly higher amount and if the market is good, why not we raise by QIP. We have not thought about other lines but other lines are not ruled out. Depending on the need we may probably think about.

Q: On Monday, we had big serge among the midcap private sector banks with the possibility or some statements that some foreign banks maybe allowed to buy some of the smaller ones. Some of these banks have no identifiable promoters. How will this pan out for smaller and midsized banks?

A: These banks have always been target. Not necessarily the foreign banks, even the Indian banks could have probably looked at. They have all been coexisting, competing with each other.

It depends on what kind of norms are we going to have because the report says that it will be easier for foreign banks to probably acquire. It has happened in the past. ING has acquired ING Vysya. It depends on the bank’s own call.