IDBI Bank plans to raise equity capital by issuing shares to institutional investors, including Life Insurance Corporation of India (LIC), through qualified institutional placement (QIP) in the fourth quarter.
The government, which holds 70.52 per cent stake in IDBI Bank, has already announced plans to infuse equity capital of Rs 555 crore in the lender through preferential placement of shares. The bank’s board last week cleared a proposal to raise equity capital from institutional investors up to Rs 2,500 crore, including the premium amount.
Deputy Managing Director B K Batra said, “We are on the edge (the floor of Tier-I capital at eight per cent preferred by the government) and want to have a cushion to manage business growth. We plan to approach LIC and other institutions in the current quarter, subject to regulatory norms.”
The capital adequacy ratio stood at 14.19 per cent (Tier-I was 8.01 per cent) at the end of December, up from 13.53 per cent (Tier-I—7.54 per cent) a year ago. Its stock closed lower by one per cent at Rs 112.2 on the Bombay Stock Exchange. In 2011-12, LIC had picked a five per cent stake in the Mumbai-based lender through preferential allotment as part of capital expansion plans. LIC holds 9.16 per cent (7.57 per cent direct stake and 1.59 per cent through its market plus growth fund).
In the third quarter, the bank restructured loans worth Rs 2,700 crore, mostly of large and mid-size corporate accounts. “It’s a sign of times,” said P Sitaram, chief financial officer. He, however, did not disclose the names of accounts.
The provisions for restructured loans rose to Rs 160 crore from Rs 134 crore a year ago.
The scale of debt recast in the quarter was higher compared with Rs 1,500-2,000 crore done in each of the previous quarters.
The outstanding restructured book was Rs 15,825 crore at the end of December, up from Rs 9,894 crore a year earlier.