In June, another private sector bank, City Union Bank, had tapped the market with a Rs 21-crore issue. Even a small bank like City Union had offered the shares at a premium of Rs 25 per share. Notwithstanding the premium and its concentration in Tamil Nadu, the retail response had been overwhelming with its issue oversubscribed 1.3 times.

Another private sector bank, The Jammu & Kashmir Bank, had recently offered its shares at a much higher premium of Rs 18. The issue was oversubscribed 2.1 times.

UTI Bank has already submitted its offer document to Sebi. UTI, the key promoter ofthe bank, will also offload two crore equity shares at the same premium.

The other promoters are Life Insurance Corporation (LIC) and General Insurance Corporation (GIC). UTI Bank is also allotting 24.9 lakh shares on reservation basis to the employees of UTI Bank and UTI.

Lead managed by SBI Capital Markets, IDBI and DSP Merrill Lynch, UTI Bank's issue may sail through considering the investor appetite for bank scrips in an otherwise lacklustre primary market.

Post-issue, UTI's stake will come down from 87 per cent to 61 per cent. Compared with other private sector banks, UTI Bank has a very high NPA level of 5.63 per cent of the total advances. The bank has recorded a 135 per cent growth in its advances for fiscal 1998 from Rs 639 crore to Rs 1,499 crore. The share prices of almost all the banks which have tapped the market in the past one and a half years are trading below their offer prices, with the exception of Corporation Bank, Bank of Baroda and ICICI Bank.