BoP officials said the plan has been dropped since the management does not want to expand the share capital. "This would make servicing of the expanded equity base difficult," said a senior BoP official.

BoP's CAR stood at 16.34 per cent as on March 31, 1998, well above the Reserve Bank of India-stipulated 8 per cent. However, the bank has said it will have to raise the level for its tier-II capital during the next fiscal to meet minimum CAR requirements as it expects its risk-weighted assets to grow by 100 per cent to Rs 1,100 crore during the current fiscal.

Advances as on March 31, 1998, stood at Rs 518.78 crore. Advances during the first half of the year have already grown by Rs 320 crore.

The Reserve Bank, in its monetary policy for the first half of 1998-99, hadannounced that banks would have to achieve a minimum CAR of 9 per cent by March, 1999, and 10 per cent by March, 2000.

The BoP scrip has been quoting marginally above par for a long time now. The scrip opened at Rs 13.50 on September 25 and touched an intra-day high of Rs 13.80. Analysts say the market has discounted BoP on account of its large exposure to small traders, where the chances of default are very high. "Going in for a rights issue would mean that the premium BoP could charge would be very low, given the price that the share is quoting at," said an analyst.

HDFC Bank, in January, raised its capital adequacy position by raising Rs 100 crore under tier-II capital. The bank raised six-year six-month money at 13 per cent on a private-placement basis. The bank's CAR as on March 31, 1998 stood at 13.92 per cent against 13.50 per cent in the previous year. Total advances of HDFC Bank increased by 46 per cent in 1997-98.

Global Trust Bank also raised funds under tier-II capital by making apreferential placement of $10 million to International Finance Corporation earlier this year.