AP Grameena Vikas Bank to raise up to ~800 crore

Andhra Pradesh Grameena Vikas Bank (APGVB), a regional rural bank sponsored by State Bank of India, is looking to raise ~600-800 crore by issuing fresh equity shares through an Initial Public Offer (IPO).

V Narasa Reddy, chairman, APGVB, said the bank was comfortable on the capital front, with a capital adequacy ratio (CAR) of 14 per cent but it would need extra capital to support growth plans over the next five years.

The lender would like to expand the branch network and asset book as well as make investments to upgrade technology. Besides retained earnings, it would need injection of funds (equity) to finance expansion and strengthen capital base. These plans are subject to regulatory clearances, Reddy said.

The bank’s CAR strengthened to reach 14.05 per cent at the end of March 2017, from 13.48 per cent a year ago, well above the level of minimum nine per cent stipulated by the K C Chakrabarty committee.

SBI has indicated it plans to list two regional rural banks (RRBs) sponsored by it in the next one year. Besides APGVB, SBI plans to list Rajkot-based Saurashtra Gramin Bank.

The RRB Act was amended in 2015, allowing these banks to raise capital from sources other than the Centre, the state government and sponsor banks. In such a case, the combined shareholding of the central government and sponsor bank cannot be less than 51 per cent.

National Bank for Agriculture and Rural Development, which supervises RRBs, is yet to issue guidelines for raising capital from the market. Reddy said the bank’s deposits grew 25.65 per cent (from ~2,616.46 crore) to reach ~12,818.58 crore. The share of low-cost deposits — current and savings accounts — increased from 36.60 per cent in March 2016 to 41.04 per cent in March 2017. The cost of deposits declined from 7.62 per cent (March 2016) to 6.89 per cent in March 2017.

Advances rose by 16.66 per cent (~1,766.76 crore) to reach ~12,368.53 crore in March 2017. Out of it, credit to agriculture and allied activities, including agriculture-portion of selfhelp group lending, stood at ~8,403.85 crore.

SBI indicated that it plans to list two RRBs sponsored by it in the next one year