Five major banks, including State Bank of India (SBI), Bank of Baroda (BoB) and Punjab National Bank (PNB), can sell shares to institutional investors in the second half of the current financial year. These steps are being taken to increase the capital base between the bank coronavirus crisis and the impact on the economy. Sources associated with merchant banking said that qualified institutional placement (QIP) may be the most preferred route to raise capital.
Public sector banks can take a decision in this context after finalizing the financial results in the second quarter. According to sources, the picture regarding its non-performing assets (NPA), one-time debt restructuring and consequent rating for banks will be clear only by the end of October. After that, banks can initiate procedures for time, quantity, the appointment of merchant bankers and other formalities for the share sale.
PNB to enter capital market in Q4
According to sources, four to five big banks like SBI, Punjab National Bank (PNB), BoB and Union Bank of India (UBI) will look to raise capital by the end of the third quarter or fourth quarter of the current financial year. Sources say that these banks have planned to raise capital in such a way that there is no cash crunch and there is enough scope for both domestic and global investors to participate in various QIPs. PNB has already expressed its intention to enter the capital market in the fourth quarter of the current financial year so that it can meet the growth requirements and regulatory requirements.
M-cap of 7 out of top 10 companies increased by Rs 67622 crore, HDFC Bank and ICICI Bank are the biggest beneficiaries
Kotak Mahindra, Axis, ICICI Bank have adopted QIP
Private sector banks including ICICI Bank, Axis Bank and Kotak Mahindra Bank have already raised capital in the last three months through QIP. Most public sector banks have already received approval from shareholders to raise capital through bonds and shares in the current financial year. During the current financial year, banks may need to raise capital to improve risk-weighted assets (RWA) and profit. As far as raising capital under equity shares (Tier-1) and bonds (Tier-2) is concerned, SBI has recently raised Rs 8,931 crore by issuing bonds with Basel-3 standards to investors. On the other hand, PNB has raised Rs 994 crore by issuing Basel-3 standards bond on the basis of the private placement and Bank of Baroda has raised Rs 981 crore through additional tier-1 bonds.
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