Axis Bank Board Approves Rs 15,000-Crore Fundraising Plan

Axis Bank Ltd.’s board approved a proposal to raise Rs 15,000 crore, making it the latest large lender to attempt fundraising amid the pandemic.

The private bank will raise the amount through issuance of equity shares, depository receipts and/or any other instruments or securities representing either equity shares or convertible securities linked to equity shares, including qualified institutional placement, American depository receipts, global depository receipts programme, preferential allotment, or any other means necessary, according to an exchange filing.

The fundraising is subject to approval of shareholders of the bank, which will be taken in the upcoming stakeholders’ meeting.

Among peers, Kotak Mahindra Bank raised Rs 7,442 crore through a qualified institutional placement to bring down the level of promoter shareholding in the bank. Yes Bank Ltd. is looking to raise up to Rs 10,000 crore this month to improve its capital adequacy ratio. On June 23, Bloomberg reported that ICICI Bank was mulling a $3-billion fundraise through a share sale.

The fundraising will help lenders shore up their regulatory capital and provide against any large defaults arising out of the national lockdown implemented to contain the coronavirus pandemic. ICRA Ltd. estimates that public sector banks will need to raise between Rs 45,000 crore and Rs 82,500 crore in the current fiscal. Private banks will need to raise Rs 25,000-48,300 crore by end of 2021-22 to maintain capital cushions against pandemic-related stress, the ratings agency said in a report dated June 4.

Axis Bank’s capital adequacy ratio stood at 17.53% as on March 31, higher than the minimum regulatory requirement of 11.5%. In the fourth quarter of 2019-20, the bank reported a net loss of Rs 1,388 crore compared with a net profit of Rs 1,505 crore a year ago. Its gross bad loan ratio stood at 4.86% as of March 2020.

About 25-28% of the bank’s total loan book was under moratorium as of April 25, Amit Talgeri, chief risk officer, had told analysts during a post-earnings conference call. The bank also announced that loans worth Rs 691 crore would have slipped to the non-performing asset category on March 31, but were still classified as standard as the banking regulator had allowed asset classification standstill till Aug. 31.