Karnataka Bank to raise funds for increasing credit demand

The board of directors of Mangalore-headquartered Karnataka Bank has given their nod for a tier-II bond offering. Ananthakrishna, chairman of the bank, said that the timing of the issue had not been decided upon.

“We are looking to raising up to Rs 150 crore through this issue, which would be for a period exceeding seven years. The timing would be based on the cost and availability of funds and is most likely to be in the first quarter of the next fiscal,” he added.

It needs to be mentioned here that bankers, who are seeking to raise resources to meet the growing credit demand (in the face of drying li-quidity), expect rates to stabilise once the fiscal year comes to a close.

“Rates should see more saner levels post-March 31,” said one Bangalore-based banker.Karnataka Bank, which offered 8.25% for its 365-day deposit (also called as a special deposit scheme), has not decided to hike the interest rate in the light of other banks offering higher interest rates for the same maturity. It is offering 9.25% for a 600-day deposit, while senior citizens get 10% for the same period.

In the interim on a different note, city-based Canara Bank has fixed March 28, 2007, for its Rs 400 crore tier-II bond offering. The bond with a coupon rate of 9.9% is for a period of 10-years and matures on March 28, 2017. It has assigned AAA / Stable by Crisil & LAAA by Icra.