Announcing the bank's decision to issue subordinate debt to raise its tier-II capital, BoI executive director S Gopalkrishnan told BoI shareholders in its second annual general meeting in Mumbai on Tuesday that the bank needs to raise its capital adequacy ratio in order to expand its asset base.

As of March 31, 1998, the banks capital adequacy ratio stood at 9.11 per cent on a capital base of Rs 637.97 crore. The banks tier-1 and tier-II capital adequacy ratio were 7.46 per cent and 1.65 per cent, respectively, in March 1998.

Projecting Bank of India's business plan in the current fiscal, Gopalkrishnan said the bank is targeting a 20 per cent increase in its operating profit. The executive director said the bank is planning to open 50 new branches in the current fiscal. The bank plans to invest Rs 120 crore over the next two years in upgradingtechnology and achieving interconnecting among bank branches.

"In order to take advantage of the integration of money, forex and gilt markets, the bank has established an integrated treasury branch. We are also taking steps to integrate banks dealing room worldwide in order to have global treasury in Mumbai," Gopalkrishnan said.

Talking on the bullion business, he said that the bank has registered a turnover of Rs 140 crore through the business of the yellow metal so far. "The bank has benefited immensely as it earned foreign exchange on dollar remittances for purchase of gold from overseas suppliers and float on margin money deposited by customers," he said.

Gopalkrishnan informed the share holders that in order to tackle the Y2K problem, the bank has already installed monitary system in all the domestic and international branches.