Allahabad Bank gains on capital raising plans

The capital ratios of Allahabad Bank are well on their way to significant improvement, owing to the fundraising activities of the company combined with the capital infusion by the government.

The company intends to raise equity capital worth Rs. 4,000 crore while the government plans to inject capital to the tune of Rs. 7,000 crore.

These measures are likely to enhance the company’s tier-I capital adequacy ratio to about 13 per cent from 7.15 per cent. However, this achievement is subject to the condition that the management succeeds in achieving risk-weighted assets of Rs. 1.34 lakh crore towards the end of the March quarter.

The equity capital will be raised through several modes including Public Issue, Rights Issue, Qualified Institutions Placements (QIPs) or a combination of the aforementioned in one or more tranches. However, this will be done in such a manner that the Government of India’s holding shall not fall below 52 per cent of the paid-up equity capital of the bank.

On Thursday, the shares of Allahabad Bank opened at Rs. 53.45 and hit a high and low of Rs. 53.95 and Rs. 52.00 per share, respectively. At 11:47 am, the stock was trading at Rs. 54.80, up 4.88 per cent.