State-run Oriental Bank of Commerce has made an application to the government for capital infusion of 10 billin rupees, its chairman said on Monday.
"This is to support growth for the next couple of years," T.Y. Prabhu told a news conference after the lender reported a forecast-beating 14 percent rise in quarterly profit.
OBC has one of the highest proportion of high-cost deposits in the sector and this has squeezed its net interest margin in the low interest regime prevailing since the end of last year.
The bank has said it expects loans to grow by a fifth in the year to March 2010 and net interest margins to rise to 2 percent.
In the September quarter, OBC's net profit rose to 2.71 billion rupees from 2.37 billion rupees a year ago. Total income grew 18.6 percent to 28.01 billion rupees.
Shares in OBC, which the market values at 65 billion rupees, were up by a third during the September quarter, outpacing both the sector index's one-fifth rise and the broader market's 18 percent climb.