The Government yesterday announced an Rs 88,000 crore capital infusion plan for 20 public sector banks -- debt-laden banks get the most capital. However, the Centre also sets six stern conditions for future fund infusion. Rs 5375 crore has been given to Bank of Baroda.
Throwing more light on the above developments, PS Jayakumar, MD & CEO, Bank of Baroda said post the capital infusion their common equity tier I capital (CET-I) would increase to 9.6 percent from the current 8.4 percent and consolidated basis it would be 10.2 percent.
The overall capital is high at 11.61 percent if Tier I, Tier II are included.
The infusion of capital will facilitate the bank to focus and accelerate credit growth. For FY18 the bank had guided for a 15 percent growth and that remains, said Jayakumar.
With regards to provisioning, he said the bank has always been conservative and have a high coverage ratio.
According to him, a 15 percent growth in risk-weighted assets (RWA) is sustainable assuming there is reasonable amount of organic profit flowing in from next year, along with capital infusion and raising funds through QIP, would keep them on road for continuous growth and helps put the issue of capital behind them.
He said on a RWA basis the bank is on track for 15 percent CAGR loan growth.
Prior to the capital infusion government ownership was 57 percent, now it takes it up again and so gives further room to raise capital, said Jayakumar.
The bank is on course to raise funds through qualified institutional placement (QIP) and hope to do it in Q4FY18. The process, documentation is already underway, he said, adding that this approval was independent of the current capital infusion
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