Indian Bank plans FPO by next June

"Our board has already approved the proposal (to go for an FPO)...We will file the DRHP (draft red herring prospectus) with the market regulator Sebi by April and come out with the issue in end May or June," its Chairman and Managing Director T M Bhasin told reporters on the sidelines of the annual Bancon 2010 here today.

Under the board resolution, the bank will issue 10 per cent fresh shares in addition to its current equity base of around 430 crore shares, he said, adding going by the current market price of the Indian Bank scrip, the issue size can go up to Rs 1,600 crore.

The government, which holds 80 per cent equity in the Chennai-headquartered bank, will not subscribe for shares in the FPO, he said, adding the stake can come down by around nine per cent post-FPO.

"The proceeds from the FPO will be used for augmenting its capital adequacy ratio and lend more to customers," Bhasin said, adding that currently, the total capital adequacy ratio of the the bank is 12.86 per cent which will go up considerably after the FPO.

Meanwhile, Bhasin said the bank will achieve a credit growth of 29 per cent in the current fiscal and a deposit growth of up to 23 per cent, both of which are above the industry average. The RBI's credit offtake target for the year is around 19-20 percent.Unlike its peers, Indian Bank is not experiencing any crunch in liquidity currently and in fact is sitting on reserves of over Rs 2,000 crore, which will be disbursed this month, Bhasin said.