United Bank of India is gearing up for an initial public offering of a maximum Rs 100 crore (Rs 1 billion), even as it has identified Rs 1,000 crore (Rs 10 billion) worth of government securities for the proposed buyback under the Centre's gilt buyback programme.

"A meeting of the executive committee on Wednesday decided to look into the proposal of IPO and recommended in its favour," UBI chairman Madhukar told PTI in Koltata on Thursday.

He said the matter would now be placed before the board of directors and after the approval they would begin the process of appointing the merchant bankers.

Madhukar, however, said they were not very keen on raising funds through an IPO because of a comfortable capital adequacy ratio of more than 14 per cent.

"Moreover, we would have to retire a part of the existing capital to the government and also adjust accumulated losses to go for the IPO," he said, adding, as per the current scenario they might not be able to raise more than Rs 100 crore through the IPO.

"If I can arrange that fund by increasing profitability, there is practically no need for an IPO," he said.

On participating in the gilt buy-back programme of the governrment, he said they held government securities to the tune of about Rs 12,000 crore (Rs 120 billion) and might sell securities worth Rs 1,000 crore.

Madhukar, however, made it clear that "A final decision on whether at all, we would participate in the buy-back scheme would depend on various factors."