New Delhi: State-run Indian Bank aims to raise over Rs 1,300 crore through Follow on Public Offer (FPO), which may hit the market in August.

The Chennai-based bank has decided to come out with the FPO of 6.14 crore shares with a face value of Rs 10 each, and has invited bids for appointing merchant bankers for the same.

The share price of the bank is currently hovering around Rs 233 a share. Considering that the bank would be pricing the issue at a discount to the current market price, it is expected that the lender would raise about Rs 1,300 crore via the FPO, market sources said.

The fund would be utilised for enhancing business operations.

The present equity capital of Indian Bank is Rs 429.77 crore, of which 80 per cent is held by the government. After the share sale, the government's stake will go down to 70 percent.

The bank is in the process of filing draft prospectus with the market regulator Securities and Exchange Board of India (Sebi) for the FPO.

This will be the first public issue of a state-run bank in the current fiscal. Last fiscal, the government had diluted stake in United Bank of India and Punjab & Sind Bank through an initial public offer.

Indian Bank on Monday reported a 11 percent growth in its consolidated net profit at Rs 1,745.41 crore for the fiscal ended March 31, 2011.

The bank's total income increased to Rs 10,550.82 crore during the fiscal, from Rs 9,037.31 crore in FY10, it said in a filing to the Bombay Stock Exchange (BSE).