Customers enter a bank branch of the Housing Finance Development Corp. (HDFC) in Mumbai. (Photographer: Santosh Verma/Bloomberg News)

HDFC Bank Mulls Raising Funds Through Institutional Share Sale

India’s largest private lender HDFC Bank Ltd. will mull raising funds through a qualified institutional placement on Dec. 20, which may also include a preferential issue to its parent HDFC Ltd.

The bank will consider raising funds through a mix of instruments like preferential allotment and American depository receipts, it said in a filing to stock exchanges. The board of the bank would further consider convening an extraordinary general meeting to get shareholders’ nod for the proposal, the filing added.

Mortgage lender HDFC Ltd., which holds 25.7 percent in the bank, will also consider raising capital on Dec. 19 which would be used to subscribe to HDFC Bank’s preferential allotment, it said in a separate exchange filing.

The fundraising plan will help shore up the bank’s capital adequacy ratio which stood at 15.1 percent at the end of September. While it’s higher than the Basel-III banking norm requirements, it is less than that of other private lenders in the country. Kotak Mahindra Bank Ltd. had a capital adequacy ratio of 19.2 percent. It is followed by ICICI Bank Ltd. with 17.56 percent and Axis Bank Ltd. with 16.32 percent.

HDFC Bank had last raised Rs 9,800 crore in February 2015 through a mix of ADRs and a QIP. Currently, foreign investors hold up to 41.5 percent in the lender.

Shares of the bank closed 0.8 percent higher ahead of the announcement, while the country’s benchmark S&P BSE Sensex closed 0.6 percent up. Its depository receipts in the U.S. were trading 1.9 percent higher at 9 p.m.

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