City Union Bank (CUB), the bank based in Tamil Nadu has set up plans of raising capital worth Rs. 1000 crore in the next three years so as to aid its business target of Rs. 50, 000 crore to be achieved by the year 2013-14.

The bank has disclosed intentions of using instruments like rights issue, qualified institutional placements (QIP) or through preferential allotments in the fund raising regime.

"We would require another Rs 1,000 crore incremental funds over the next three years to reach our business target," N Kamakodi, executive director of the bank said.

"If the bank has to grow at the rate of 30 per cent we have to increase our capital over three years," he added.

The bank has raised Rs. 200 crore in the last two years using rights issue and preferential allotments.

The Rs. 50, 000 crore target of the bank encloses Rs 27,000 crore deposits and Rs 23,000 crore credit. The present financial year is expected to end with the bank doing a business of Rs 16,500-17,000 crore compared to Rs 13,700 crore last year.

The bank has a net worth of Rs. 850 crore presently and would be enhanced to Rs. 1000 crore by December 2010, Kamakodi said.

The bank presently has 222 branches and has applied for another 62 branches to the RBI.

"Our focus will continue to be the South, especially Tamil Nadu, where for another 10 years we have space to grow," said Kamakodi.

Recently, the bank opened branches in Madhya Pradesh, Rajasthan, Punjab and Uttar Pradesh. This year the bank plans to open branches at Chhattisgarh and Orissa.

The credit growth for the bank has also been commendable. The bank has been able to reach a credit growth of 20% which is ahead of the 16% mark set by RBI. The bank is expected to close the year with a credit portfolio of around Rs 6,700 crore.

"We started witnessing pick-up in credit, for instance in June the utilization was around 58 per cent which has now increased to 80 per cent," said Kamakodi.