Will approach int'l mkts if Govt approves QIP: IDBI Bk

Though the government has not directed in what manner it will infuse capital to banks, BK Batra, deputy managing director, IDBI Bank says they wll approach international markets if the government approves qualified institutional placement (QIP).

Also read: Equity infusion in PSBs to be announced today: Sources

Finance Ministry sources had on October 4 indicated that the government is looking for ways to infuse additional capital in PSU banks and QIP was termed to be one of the most encourage routes.

Speaking to CNBC-TV18, Batra says the bank’s total capital adequacy is sitting comfortable above 12 percent for tier II and little below eight percent for Tier- I cities.

 “We have requested government to give us enough capital so that our tier-I ratio comes to 8 percent,” adds Batra.

Below is the edited transcript of Batra’s interview to CNBC-TV18.

Q: First have you heard from the government with regards to any sort of PSU capital infusion by the government and whether qualified institutional placement (QIP) would be on the cards?

A: We have not heard anything from the government though we have requested government to provide the additional capital but in what form they are going to permit us to raise this or to contribute to what extent has not yet being advised to us.

Q: What is your capital adequacy stand at? What is your tier-I and tier II stand at?

A: Our total capital adequacy is comfortable. It is above 12 percent but our tier I ratio is little below 8 percent

Q: What would your total funding requirement be?

A: We have requested government to give us enough capital so that our tier-I ratio comes to 8 percent.

Q: Wanted to ask you whether you would be comfortable with a QIP route or not considering that most of the PSU banks are currently undergoing higher cost of funding plus there are asset quality issues because of the macro environment – would a QIP justify your share price?

A: As far as QIP is concerned, we will have to go for 81 instruments and the issue in that is that we will have to approach some foreign institutions or contribution because 81 instruments are not yet evolved fully within India. But we will definitely approach the international market, if government permits us to make a QIP of 81 instruments.

Q: Your gross NPAs as of the previous quarter was around 4.34 percent I do understand that you are releasing numbers this week but in terms of trend for asset quality as well as core growth including net interest margins where is the bank headed. Is it possibly going to improve in the next coming quarters or is it going to worsen?

A: Since our results are just round the corner it would not be appropriate for me to comment on them. You will see them in a week’s time or so.