Strong loan growth at home and the March 2007 deadline to introduce Basel II rules are giving India’s banks an appetite for capital. At least three public sector banks (PSBs) – Bank of Baroda, Union Bank of India (UBI) and Andhra Bank – will be in the market this year to raise equity capital. ICICI Bank, which is India’s second largest bank and is listed on the New York Stock Exchange (NYSE), completed a $1.6bn offering in December, the largest equity sale by an Indian bank. In May last year, private bank UTI Bank completed a $200m offering of global depository receipts.
The demand for new loans has picked up quickly this year following economic growth of about 8% in the first half of this fiscal year. “After several years of reaping treasury profits from the fall in interest rates, banks are back to making money from their core business of lending, and loan growth is at about 31% this year,” says Cherian Varghese, chairman and managing director of UBI.
