May look at QIP, sell non-core assets to raise capital: IDBI Bk

IDBI Bank is fairly well placed despite booking a loss and making provisions in the third quarter, says the bank's deputy managing director BK Batra. "We are above the Reserve Bank norms and have lined up avenues through which we can augment capital," he told CNBC-TV18.

The bank is looking at various options through which it can raise capital. It is looking at the QIP route and may also sell non-core assets. Batra says IDBI Bank has adequate back up for any capital requirement as well as any additional provisioning that the bank may have to go in for in the fourth quarter.The topic of capital requirements of PSU banks for provisioning of bad loans came to the fore after S&P on Tuesday said these banks are facing possible downgrades due to rising capital needs. It has already trimmed outlook on Bank of India to 'negative' from 'stable' and put Indian Overseas Bank on 'CreditWatch' with negative implications.Below is the verbatim transcript of BK Batra's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: What we hear from S&P is that they are worried about a whole lot of public sector banks. About IDBI they say that they are worried about the sharp deterioration in non-performing loans (NPL), in asset quality and would it negative if capital didn't come. If indeed you are put on a negative watch, does it impact letter of credit (LC) business, how does it hurt the working of the bank?A: I think the reason for NPLs going up are by now well-known and the capital requirement additionally would be there for all banks that is also quite clear. However, as far as IDBI Bank is concerned, we fairly well placed in the sense that even after booking a loss and making provisions of Rs 3,300 crore, we are above the Reserve Bank of India (RBI) norms.At the same time, for taking care of our business, we have lined up avenues through which we can augment our capital. One of them of course is qualified institutional placement (QIPs), which we kept on hold for market reasons but we can return to market as and when the sentiment improves.Second is we have also been authorised by government to go in for additional tier 1 (AT 1) up to USD 500 million and that is another source to augment capital.Third is the non-core assets, which we have a fairly good stock but depending upon the interest in them and the pricing that they get offered, one-by-one we can monetize them also. So, we have quite adequate back-up to take care of capital requirement for growth as well as for any additional provisioning that we may have to make in the forthcoming quarter as well.Latha: What is the capital adequacy now especially the tier-I and what might it be a quarter down the line?A: Our tier-I is close to 8 percent and overall is 11.7 percent and quarter down the line, it is very difficult to say how much it would be.