The board of ICICI Bank has approved a proposal to raise upto Rs 15,000 crore. The bank will raise funds through various options including private placements, preferential issue, qualified institutional placement (QIP) and further public offer. ICICI Bank has joined the league of banks raising capital to absorb Covid-19 shock. State Bank of India (SBI), Axis Bank, Yes Bank, Federal Bank, among others have announced plans to raise capital.
ICICI Bank had earlier said that the lender would look at further strengthening the balance sheet as opportunities arise. “We are conscious of the importance of balance sheet resilience in a highly uncertain scenario. Our current capital position is strong. We would continue to assess this and look at further strengthening the balance sheet as opportunities arise,” ICICI Bank MD & CEO Sandeep Bakhshi had told analysts on May 9. The bank’s total capital adequacy as on March 31, 2020 stood at 16.11% .
ICICI Bank on June 22 sold 1.5% stake in ICICI Prudential Life Insurance Company on the stock exchange for Rs 840 crore.
Many banks had been taking capital raising route to cushion their balance sheet. The largest lender SBI will take shareholders’ approval to raise Rs 20,000 crore in the annual general meeting (AGM) to be held on July 14. Private sector lender Axis Bank announced last week that it has received board’s approval for raising funds up to Rs 15,000 crore through issuance of various securities. Similarly, Yes Bank Bank board will meet on July 10 to discuss modalities of follow-on public offer (FPO). Federal Bank will consider a capital raise at its July 19 board meeting. Earlier, Kotak Mahindra Bank had raised Rs 7,442.5 crore through a qualified institutional placement.
Credit Suisse estimated that banks will need additional capital to the tune of $20 billion to tide over asset-quality issues. Reserve Bank of India (RBI) has allowed borrowers a six-month repayment holiday from March 1 to help them tide over the difficult situation in the wake of the pandemic.