State-run Union Bank of India plans to raise 5 billion rupees through Tier II and perpetual bonds by March, but has no plans to sell equity under a rights issue, its chairman said on Tuesday.
Several Indian banks have stepped up bond sales over the past month to meet Basel II requirements by March.
The bank aims to raise its capital adequacy ratio to 12.3 percent under Basel II norms by March, from 11.7 percent currently, M.V. Nair told reporters at a news conference.
"The RBI gave us the benefit of reduction in risk weightage, provisioning reduction," he said. "So there is no big hurry to mobilise the capital (thorough equity)."
Separately, in a filing to the stock exchange, Union Bank said it raised 2 billion rupees through lower Tier II subordinated debt, at an annual coupon rate of 9.5 percent.
When asked if the bank would seek funds from the government for recapitalisation through a World Bank-funded plan, Nair said, "That we may have to study."
The World Bank has a $14 billion lending plan for India, part of which would be used to infuse capital into state-run banks facing liquidity strains.
A finance ministry official has said the government would provide banks between 100-150 billion rupees under this scheme, if banks sought help.
Nair also said he expected the bank's loan portfolio to grow by 28-29 percent in the fiscal year to March 31.
Shares in Union Bank closed up 5.1 percent at 157.25 rupees in a firm Mumbai market
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