Indian Bank expects its $1 billion (Rs 4,500 crore) medium term notes to hit the market by mid-July. The bank expects to list the bonds on the Singapore Stock Exchange.
On the sidelines of the Indian Bank's annual general meeting, Mr T. M. Bhasin, Chairman and Managing Director, said the offer document is ready for $1 billion but will be issued in two tranches of $500 million each. The bank is raising these bonds to expand its overseas lending.
The bank expects about 22 per cent growth in credit this year, he said. Last year, deposits grew by 15.8 per cent and credit by 21.4 per cent. If ‘credit' outpacing ‘deposits' is a concern, the added problem now is that the cost of deposits would go up, as savers are shifting from ‘savings accounts' to (the higher interest) ‘term deposits'.
However, Mr Bhasin was confident that the resultant hike in cost of funds could be balanced by a higher ‘non-fund income'.
He sees scope for raising this especially because the Insurance Regulatory and Development Authority (IRDA) has recently permitted banks to sell insurance products of four insurers (as opposed to only one earlier).
Indian Bank is “exploring opportunities” in this area. Mr Bhasin, however, ruled out setting up an insurance company or taking stakes in one, as the upfront capital commitment would be large and returns slow to come.