To battle COVID-19 pandemic, Axis bank plans to raise ₹35,000 Crores

Industry reports are saying that India’s 3rd largest bank, Axis Bank Ltd. is planning to raise as much as ₹35,000 Crore ($4.6 Billion), this month onwards. This comes after the bank’s report of a sharp downturn in profits as it scrambled to gather provisions in the March-end quarter of 2020. These provisions were intended to cover for any potential loan-defaults, during the global Coronavirus pandemic.

The Mumbai-based lender’s provisions surged up to 185%, amounting in a total of 7,730 Crore, for Q4 of last fiscal year, it said in a stock exchange filing, on Tuesday. Of this, 3,000 Crore are for COVID-19 related exposures, the bank added.

The bank’s board is said to have approved this fund-raising already. The actual proposal intends to do so through sale of new bonds. This move might include investment in foreign currency (FOREX).

Axis Bank’s CEO, Amitabh Chaudry said, in a post-investors call, that the coronavirus will be serious hindrance, this fiscal year and provisions will increase materially in tune with their market predictions. He said that for now, the bank will reinforce the risk factors while deciding on new loans.

Axis Bank joins peers including Kotak Mahindra Bank Ltd. in seeking additional funds as banking sector prepares for the fallout from India’s economic slump. The world’s strictest lockdown restrictions are hurting several “non-essential” business activities. While regulators have permitted a moratorium on loan-repayments for three months, they also provided banks additional provisions, seeking guarantees of market support.

last week, Kotak Mahindra Bank announced plans to issue about $1 billion of new shares to bolster capital buffers.

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