Private sector lender South Indian Bank (SIB) is planning to raise up to Rs 2,500 crore to shore up its capital base for business growth and meet regulatory norms.
The bank's shareholders had given approval for this fundraise in the previous AGM last fiscal, however, the bank did not raise the funds.
A banking company requires adequate capital not only to meet the needs of a growing business but also to comply with the applicable regulatory requirements, SIB said in a regulatory filing.
In its ensuing annual general meeting (AGM) scheduled to be held on July 12, the lender will seek shareholders' approval to raise tier-I capital of up to Rs 2,000 crore through the issuance of securities by various modes.
It will also seek permission to raise an additional Rs 500 crore to comply with Basel III norms by issuing bonds on a private placement basis.
"As the business grows, capital requires to be augmented. The bank expects to continue its robust growth trajectory in the medium to long-term. Availability of adequate capital is one of the key requirements for achieving this feat.
"As a proactive move to leverage the available business opportunities and for maintaining appropriate regulatory capitalisation levels, the bank proposes to raise additional capital aggregating up to Rs 2,000 crore or its equivalent amount," the bank said.
Even though the bank has proposed to raise additional capital aggregating up to Rs 2,000 crore during 93rd AGM held on August 18, 2021, due to adverse market situation the bank has not raised the same, it added.
The lender may raise the equity capital in foreign currencies by way of Qualified Institutions Placement (QIP) on a private placement basis or may issue foreign currency convertible bonds or issue fully convertible debentures/partly convertible debentures, or any other financial instruments or securities convertible into equity shares.
The issue of securities may be consummated in one or more tranches, it said.
Besides, the lender said that it will borrow funds in Indian/foreign currency by issue of Basel III compliant debt securities on a private placement basis in one or more tranches for an amount not exceeding Rs 500 crore, within the overall borrowing limits of the bank, as approved by the members.
"...the board of directors, after assessing its fund requirements, has proposed to obtain the consent of the members of the bank for borrowing/raising funds in Indian/ foreign currency by issue of debt securities including but not limited to non-convertible debentures, bonds, up to Rs 500 crore in one or more tranches in domestic and/or overseas market," it noted.
Likewise, the lender had obtained the nod from shareholders for this capital raise in the preceding AGM held in August 2021. However, it did not raise any debt capital during 2021-22, hence approval is needed afresh for the same.
Shares of South Indian Bank closed at Rs 7.52 apiece on BSE, up 1.90 per cent on BSE.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today