Date:23/04/2005 URL: http://www.thehindubusinessline.com/2005/04/23/stories/2005042301210600.htm

Back Dhanalakshmi Bank panel to explore ways to hike capital

Our Bureau

Kochi , April 22

DHANALASKHMI Bank has set up a task force, consisting its board members, to advise on all options and avenues available to hike capital base.

The bank plans to increase capital to meet the Basel-II norms and other requirements.

"With a view to growing consistently in the competitive environment and expanding our lending and business operations, Dhanalakshmi Bank will have to chart out a time-bound programme to increase the capital base," said Mr T.R. Madhavan, Managing Director.

Going by the business trends, the networth of the bank, which is now around Rs 105 crore, will have to be increased to around Rs 300-350 crore in about three years. The capital base of the bank, including Tier-II capital, is expected to rise to around Rs 500 crore.

All the avenues open to the bank would be explored, Mr Madhavan said. The bank could go in for a strategic investment, rights issue, public issue, ploughing back of profits, or a combination of all these measures.

Strategic investors both within and outside the country are very keen on such investments, banking sources said.

With the RBI stipulating that no single investor can hold more than 10 per cent stake in a bank, rights issue may not be feasible at this juncture.

Ploughing back of profits may not be sufficient to take the capital base to the desired levels in the given time frame.