The remaining Rs 4,500 crore will be raised by way of additional Tier-1 and Tier-2 capital instruments with an inter-changeability option, the bank said in the release.
The Bank of Baroda board on Friday approved raising of additional capital of up to Rs 13,500 crore, the lender informed stock exchanges through a release. Out of the total amount, the bank will raise Rs 9,000 crore by way of common equity capital through various modes, including qualified institutional placement (QIP).
The remaining Rs 4,500 crore will be raised by way of additional Tier-1 and Tier-2 capital instruments with an inter-changeability option, the bank said in the release. The public sector lender plans to raise the total amount till March, 2021. However, it has specified that window remains open beyond the timeline of March,2021, in case needed.
The bank had earlier raised Rs 3,397 crore through Additional Tier-I (AT1) bonds in December quarter of 2019. The capital adequacy ratio of the bank remained above regulatory threshold level at 13.98%, as on December 31,2019. The Reserve Bank of India (RBI) threshold of capital adequacy ratio is 11.5%. FE reported earlier that Bank of Baroda has sanctioned Rs 606 crore to 4,598 borrowers under Covid-19 emergency credit line till April 19.
Earlier on April 7, Life Insurance Corporation (LIC)-controlled IDBI Bank announced raising upto Rs 7,500 crore in the current fiscal. The borrowing plan of IDBI Bank included AT1 bonds up to Rs 3,000 crore, Tier-2 bonds of up to Rs 3,500 crore and infrastructure bonds up to Rs 1,000 crore by way of private placement during 2020-21. Similarly, public sector lender Bank of India declared in February to raise around Rs 1,500- 2000 crore through QIP.
Finance minister Nirmala Sitharaman had announced in the Budget that public sector banks could tap capital markets for funds. TheFM said a few among them (banks) would be encouraged to approach the capital market to raise additional capital.