Page 8 - Banking Finance October 017

BANK UPDATE

BANKING

NEWS
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NEWS

PSB mergers on fast Indian Bank plans FPO

track Indian Bank Ltd is considering making a follow-on public offering (FPO) in the last
quarter of the current fiscal, as per sources, whereas the
A framework to speed up mergers of Managing Director and Chief Executive of Indian Bank, Kishor
public sec- Kharat avoided all calls and messages as sent in this regard.
tor banks The bank plans to raise around Rs1,400 crore to strengthen
has been its capital base and reduce government shareholding.
recently
approved Airtel Payments Bank launches UPI-based payment
by the service
Cabinet. The mergers will not in-
volve any cash but only share swaps. Airtel Payments Bank Ltd recently launched a Unified
Payments Interface based payment service for all its
The government also said there
customers. The important thing in the revenue model
would be no job losses after any of
is the volume in customers and volume in transactions.
the mergers. "The government is
saying it will not force (mergers). "Through UPI, we can enable a wide range of transac-
They will leave it to the banks. If the tions", as mentioned by "Shashi Arora, managing director and chief executive of
players find it reasonable and prof- Airtel Payments Bank.
itable, they will work on it," said Debt investors of IDBI receive interest amount
State Bank of India Chairperson The IDBI bank after facing a downward rating managed to pay Rs 166.3 crore
Arundhati Bhattacharya.
as interest removing doubts of its investors about its ability to
"You have a large number of banks pay. "Issuers of perpetual bonds would be able to raise money
in the public sector. The object is to at a relatively lower cost," said Ashish Agarwal, executive di-
create strong banks. Our experience rector at AK Capital. "IDBI Bank's interest payment has clearly
of consolidation has been positive so added investor confidence. They were earlier apprehensive of
far," Jaitley said at a media briefing a default, which would have dented the market sentiment."
after the Cabinet meeting.
"State-owned banks are going through certain asset quality pain but is unlikely
After approval in principle from the to miss interest payments with sovereign support," he said. "For dedicated debt
RBI and the government, the banks market investors, perpetual bonds throws an opportunity to earn extra interest
would take steps to merge in accor- income," said Ajay Manglunia, executive vice-president at Edelweiss Finance.
dance with the law and the require- "With IDBI Bank meeting repayment schedule, it will encourage domestic insti-
ments of the Securities and the Ex- tutional and wealthy investors, who were earlier doubtful. It has certainly eased
change Board of India. concerns over its risk factors."

BANKING FINANCE | OCTOBER | 2017 | 7

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