Private sector bank Karnataka Bank will be issuing Rs 500 crore worth of equity shares through a qualified institutional placement. The issue will contribute towards its Tier I capital, in the computation of its capital adequacy ratio. Banks have to maintain a certain proportion of their capital to their assets (loans) known as capital adequacy ratio (CAR), a measure of their financial strength to meet contingencies. Karnataka Bank had a CAR of 13.54% as of March 31, 2009 as per Basel-I norms.
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