Chennai: With 50.1 per cent of its 2,052 branches located in rural areas, Allahabad Bank has decided to expand its branch network in urban centres — and most of them in the southern region. Currently the bank has a major presence in India’s northern and eastern regions.

The bank, however, is yet to freeze the number of new branches to be opened, says Allahabad Bank chairman and managing director B Samal. The bank’s remaining branch network is located in semi-urban (16.8 per cent), urban (19.2 per cent) and metropolitan (13.9 per cent) areas.

As the branch network is skewed heavily towards rural areas, the bank is now realigning some of them to cater to the semi-urban centres, too. Samal says the bank’s retail thrust through special branches called retail-banking boutiques is providing good business. At the end of the last fiscal, the total credit extended by these specialised outlets stood at Rs 890 crore.

During the first half of the current fiscal, Allahabad Bank has generated an additional business of Rs 800 crore, out of which Rs 500 crore is from retail advances. “The retail advances are logging an impressive 15-per cent growth,” he says. The bank, which has added 2 lakh retail customers during the last two years, has signed a bancassurance deal with ICICI Prudential Life Insurance to increase its non-interest income.

Apart from retail boutiques, the bank has 32 specialised branches and corporate boutiques to cater to medium-sized corporates. At a time when new private banks are reaping the benefits of their investments in information technology (IT), Allahabad Bank, like many other nationalised banks, still lags on that front. Only 342 branches have been fully computerised till date.

Samal says some of the IT solutions were developed in-house and some sourced from outside. “The bank has hired consultants to advice on the kind of investments to be made on IT. We are utilising the Rs 60 crore borrowed from the World Bank for bank computerisation. We plan to install 100 automatic teller machines (ATM) to our existing 41 ATMs in 23 cities.”

Speaking about the bank’s business, he says: “The bank’s total deposits and advances stand at Rs 22,665 crore and Rs 11,714 crore, respectively.” The cost of deposits has slid to 7.2 per cent the last fiscal from 7.44 per cent the previous year. However, the bank has fallen short of meeting its export credit target.

Boosted by profits from treasury operations, Allahabad Bank’s net zoomed to Rs 80.21 crore last year as against Rs 39.91 crore declared for the year 2000-01. But when compared to the net profit of Rs 135 crore posted during 1999-2000 it was a steep fall the following year.

The bank’s net non-performing assets stood at Rs 1160.16 crore at the end of the last fiscal. This was after provisions of Rs 822 crore, compromises (Rs 86.33 crore) and write-offs (Rs 164.44 crore). Samal says notices to 583 borrowers have been issued to recover Rs 84 crore.

The 137-year-old bank (many of its office buildings have been classified as heritage buildings) is coming out with Rs 100-crore par initial public offering (IPO). The IPO is expected to shore up the bank’s capital adequacy ratio (CAR) after taking into account its future business needs.

At the end of the last financial year the CAR came down to 10.62 per cent from 11.51 per cent at the end of 31 March 2000. After the IPO, the CAR will go up to 11.5 per cent. The Reserve Bank of India’s stipulated CAR norm is 9 per cent. While the present issue will shore up the bank’s tier-I capital, plans are afoot to raise the tier-II capital by Rs 100 crore soon.

When queried about the reason for a par issue, Samal replies: “Post-issue, we wanted to leave some money in the hands of our investors.”