The state-owned Allahabad Bank said that it would will explore the option of raising Rs1,000 crore by September 2009 to strengthen its capital to support growth.

''We may look at raising about Rs1,000 crore this year, whenever the market is conducive, as we did last year,'' chairman and managing director K R Kamath said at the bank's annual general meeting on Monday.

''We are not in a hurry to raise capital as we have a comfortable capital adequacy ratio at 13.11 per cent. Nevertheless, we may raise the money to take advantage of the lower interest rate regime,'' Kamath told reporters after the AGM.

''We might also look at a rights issue if things are favourable,'' Kamath he said. However, he ruled out any immediate possibility of a rights issue or dilution of government stake from the current level of 55.43 per cent.

At present, public sector banks are not allowed to reduce government s stake below 51 per cent, and therefore the bank does not have a much elbow room in this regard. ''We can only consider this option once the government allows it,'' Kamath said.

He added that the bank has headroom of Rs2,450 crore for raising capital, including Rs600 crore of tier 1 capital. Another Rs1,850 crore could be mopped up by using bond instruments like IPDI and subordinated bonds, he said.

At the AGM, the bank's shareholders passed a resolution by three-fourth majority to delist the bank from the Calcutta Stock Exchange. ''There is no transaction happening on the stock exchange for many years and so we are unnecessarily running compliance risk. So, we have decided to delist it from the exchange. But I am aware of the sentimental attachment to this exchange,'' Kamath said. He however clarified that Kolkata will continue as the bank's headquarters.

For the first quarter to June 30, 2009, the bank recorded a 25 per cent year-on-year lending growth, while its deposits grew 19 per cent compared to the April-June 2008 period. Kamath said the bank's margin is under pressure as the economy is passing through a low interest rate regime. However, he indicated that the bank s income from investment has been good for the quarter.

The bank expects its net interest margin to be about 2.75 per cent in 2009-10, as against 2.88 per cent last year. Earlier, the bank had projected NIM of 3 per cent.

''While our effort will be to hold on to NIM of 2.88 per cent, on a conservative basis, it could be 2.75 per cent. The pressure is likely to be due to softening of the interest rate regime compared with third and fourth quarters. There has been pressure on spreads. Also, there is less possibility of re-pricing upwards some of the accounts,'' said Kamath.

The bank has lowered its credit and deposit growth target to 18 per cent this fiscal. In April, Kamath had said he expected 20 per cent growth in credit and deposits. Last year, the bank's gross credit went up 18.15 per cent and deposits rose 18.65 per cent.

Since the start of the current financial year, the bank's loan book has grown 25 per cent and deposits 18 per cent on a year-on-year basis. However, growth in advances and deposits has been marginally lower in the first quarter than in the quarter ended March 31, 2009.

Asked if the bank was contemplating reduction in interest rates, Kamath said, ''As of now, we are operating in a soft interest regime.

There were signals from the Reserve Bank of India that the rates should come down. We will respond to it as far as possible.''