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Chidambaram asks banks to mobilise resources from capital market

Special Correspondent

Bharat Overseas Bank's 100th branch inaugurated; networks core-banking operations

— Photo: P. V. Sivakumar

RESTORING HEALTH OF SFCS: The Union Finance Minister, P. Chidambaram, at the Golden Jubilee celebrations of the Andhra Pradesh State Finance Corporation in Hyderabad on Tuesday. — Photo: P. V. Sivakumar

CHENNAI: The Union Finance Minister, P. Chidambaram, on Tuesday reiterated his suggestion that banks should issue public capital and get listed on the stock exchanges, so that they could be assessed by the market in terms of their competitiveness.

Opening the 100th branch of Bharat Overseas Bank Ltd (BOBL) in Kilpauk, which he described as an example of public-private partnership (the bank's main promoter is the government-owned Indian Overseas Bank, while private banks and other shareholders account for the balance of its capital), Mr. Chidambaram said all institutions were owned ultimately by the public, who, along with their customers, were their best judges. "All public institutions must subject themselves to market discipline and should be judged by the quality of their corporate governance and accountability", the minister said.

While commending BOBL on core-banking linking of all its branches, the minister said the bank had achieved a deposit level of Rs. 2,800 crore, advances of Rs. 1,700 crore and capital adequacy ratio of 14.95 per cent.

Small but strong bank

Its net non-performing assets, he said, were only 1.56 per cent, net interest margin 3.39 per cent and interest spread 3.83 per cent. "It is a small but strong bank", he said.

Mr. Chidambaram, however, said banking was becoming a volume game as a result of severe competition and banks' strength would in future depend on their size.

G. Krishna Murthy, Chairman and Chief Executive Officer of BOBL, said the bank was targeting a growth rate of 30 to 35 per cent both under SME and retail banking.

T. S. Narayanasami, Chairman and Managing Director, Indian Overseas Bank, said the banking industry, while experiencing a robust credit growth, was not in a position to access adequate resources in a cost-effective manner.

This (Kilpauk) branch of BOBL is its 36th branch in Tamil Nadu and 13th in the city. The bank has 26 onsite ATMs besides more than 3,000 ATMs under the BANCS network.

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