Commercial banks such as IDFC First Bank, RBL Bank, Kotak Mahindra Bank, Bank of Baroda, Yes Bank, IndusInd Bank plan to raise at least ₹35,000 crore by selling shares as they seek to fortify themselves from the economic shocks.
The banks are hoping that the extra funds would go a long way to bolster their capital base and arrest any erosion in their capital adequacy. There are widespread apprehensions that the countrywide suspension of businesses due to the more than month-long lockdown will result in borrowers finding it tough to repay loans, which may swell slippages and force lenders to go for higher provisioning and loan write-offs from the September quarter .
These banks have in the past few weeks drawn up plans to issue fresh shares, which will enhance their common equity tier 1 (CET 1) capital, a yardstick to assess a bank’s ability to provide for loan losses, write off loans and spend money on potential acquisitions or capital infusion plans.
Private lenders IDFC First Bank and RBL Bank plan to raise ₹1,800-2,000 crore each, said two people directly in the know.
