Central Bank of India to complete rights issue by Q4

Central Bank of India has got the RBI's nod to go ahead with its rights issue. It is planning to mop up around Rs 2,500 crore through this route to shore up its capital adequacy ratio. As of September-end 2010, the bank had a capital to risk weighted assets ratio of 11.65 per cent (Tier-I: 6.08 per cent and Tier-II: 5.57 per cent). The rights issue will boost the Tier-I capital to eight per cent and the overall CRAR to around 14 per cent.

Though the minimum regulatory CRAR requirement for banks is nine per cent, the Government has mandated a total CRAR of 12 per cent with eight per cent Tier-I Capital as banks would require capital commensurate with the increase in their Risk Weighted Assets. The government owns 80.20 per cent stake in Central Bank of India and it will subscribe to the rights issue in proportion to its shareholding.