KVB hikes rights issue premium

By Our Special Correspondent

CHENNAI, SEPT. 10. Karur Vysya Bank (KVB) has revised upwards the premium for its proposed rights issue following advice from the Reserve Bank of India. The 1:1 rights issue will now have a premium of Rs. 50 per share (face value Rs. 10). Earlier, the bank had proposed a premium of Rs. 35 per share.

The bank, it may be recalled, had announced a rights-cum-bonus issue in the ratio of 1:1. It has a paid-up capital of Rs. 6 crores.

According to Mr. A. D. Navaneethan, Chairman, since the Reserve Bank has felt that the current strength of the bank can command a higher premium, the board of the bank has chosen to revise it upwards.

Addressing a press conference here, the chairman expressed optimism that the apex bank would give its approval soon for the rights-cum-bonus issue proposal with revised premium.

Mr. Navaneethan pointed to the challenges posed by the recession- hit economy and explained how difficult it was for old generation private banks such as KVB to operate in an uneven turf. On the one hand, discrimination had ensured that those banks did not get low cost government deposits, on the other, competition and obligations on priority sector lending front had seen their margins shrink.

Nevertheless, KVB, he said, ``is taking steps to improve credit level''. He said the bank would look for untapped potential to step up its credit flow.

In this context, he pointed to opportunities in housing, retail finance and the like.

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Section  : Business
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