AU Small Finance Bank shareholders okay Rs 14,500 cr debt, equity raise plan

By: |
August 18, 2021 6:45 PM

In its annual report 2020-21, AU Small Finance Bank said that it will seek shareholders approval for raising an amount not exceeding Rs 12,000 crore by issuing debt securities. It said the debt securities could be issued in domestic and/or overseas market in one or more tranches.

"The Chairman further announced that discussion on all the agenda items have been completed successfully," it said in the filing to summarize the AGM proceedings.

AU Small Finance Bank has received shareholders’ nod for raising equity and debt capital totalling up to Rs 14,500 crore to fund its business growth.

The shareholders of the bank have passed the fund raise proposals at its annual general meeting (AGM) held on August 17, 2021, the bank said in regulatory filing on Wednesday.

In the AGM, chaired by Raj Vikash Verma, part-time Chairman and Independent Director of the bank, AU SFB outlined key business numbers, branch expansion, current economic situation and challenges, the bank said.

“The Chairman further announced that discussion on all the agenda items have been completed successfully,” it said in the filing to summarize the AGM proceedings.

In its annual report 2020-21, AU Small Finance Bank said that it will seek shareholders approval for raising an amount not exceeding Rs 12,000 crore by issuing debt securities. It said the debt securities could be issued in domestic and/or overseas market in one or more tranches.

It had also proposed to raise Rs 2,500 crore equity capital and to seek shareholders’ approval in the AGM.

“As a matter of prudence, in order to always remain in compliance with various regulatory requirements in case of any unforeseen contingency, and while ensuring that there is sufficient capital to support growth, we seek an enabling resolution to raise additional equity capital up to Rs 2,500 crore,” it said in the report released in July.

The lender said that it would need capital to support growth when the macro-economic conditions will improve.

And to meet increasing regulatory requirements, it is important that the bank remains well-capitalised, with a strong tier 1 capital base, AU SFB said in the annual report for FY21.

Bank’s capital to risk weighted asset ratio (CRAR) stood well above the regulatory requirement, at 23.1 per cent as of June 30, 2021. The RBI regulatory requirement for the CRAR is of 15 per cent. The tier-I ratio stood at 21.6 per cent.

In the first quarter ended June of the current fiscal year, AU Small Finance Bank (SFB) posted 15 per cent growth in its net profit at Rs 203 crore.

The lender recently also launched its credit card, the first and only SFB to issue credit cards to its customers.

Stock of AU Bank closed at Rs 1,341.45 apiece on BSE, down 0.69 per cent from its previous close.

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