Indian Bank plans an initial public offer in July 2004 to raise capital for funding its expansions, its chairman Ranjana Kumar said on Tuesday.

Elaborating on the bank's plans, Kumar said the IPO was being planned in the second quarter of next fiscal, preferably in July 2004.

She declined to give the amount or the percentage of government holding that would be diluted after the IPO.

The IPO of the erstwhile weak bank assumes importance as only three PSU banks -- Canara Bank, Punjab National Bank and Allahabad Bank -- were able to tap the markets last year.

Indian Bank's IPO also assumes significance as it is confident of earning a net profit for three consecutive years.

Speaking to reporters, she said the additional capital was required in order to sustain the expansion in its business, which was at over Rs 40,169 crore (Rs billion) (Rs 401.69 billion) in 2002-03.

"We expect deposits to go up by Rs 5,000 crore (Rs 5 billion) to over Rs 32,000 crore (Rs 320 billion), while credit should go up by Rs 2,000 crore (Rs 20 billion) to over Rs 15,000 crore (Rs billion)," she said.

The bank posted a whopping 470 per cent growth in net profit at Rs 188.83 crore (Rs 1.88 billion) last fiscal compared to Rs 33.22 crore (Rs 332.2 million) in 2001-02.

The drastic improvement in profits was mainly on account of lower provision for bad assets, which came down to 6.15 per cent of advances in 2002-03 from 8.25 per cent in 2001-02.

Gross NPAs came down to Rs 1,630 crore (Rs 16.30 billion) (12.39 per cent) from Rs 2,578 crore (Rs 25.78 billion) (17 per cent) in 2001-02.