On Wednesday, India’s leading private sector lender HDFC Bank said it plans to raise ₹50,000 crores through private placement mode of debt instruments over the period of the next 12 months. The bank’s board is yet to consider the proposal on 17 April.
“…We wish to inform you that the bank proposes to raise funds by issuing perpetual debt instruments (part of additional tier I capital), tier II capital bonds and long-term bonds (financing of infrastructure and affordable housing) up to a total amount of ₹50,000 crore…” HDFC Bank said in a regulatory filing.
It further says, Perpetual bonds have no maturity date, so they can be treated as equity, not as debt.
In June, last year, HDFC planned to issue Unsecured Perpetual Debt Instruments (part of Additional Tier I capital), Tier II Capital Bonds and Long Term Bonds (financing of infrastructure and affordable housing) on a private placement mode.
It comes after a couple of days when Reserve Bank of India (RBI) governor Shaktikanta Das met bank chiefs and insisted on the fact of the need for raising adequate capital for strengthening balance sheets.
As per the Mint report, HDFC Bank is maintaining well above minimum regulatory requirements.
It has a total capital adequacy ratio under Basel III guidelines, which stood at 18.9% as of 31 December 2020, as against a regulatory requirement of 11.075% which includes a capital conservation buffer of 1.875%, and an additional requirement of 0.2% since it is a Domestic Systemically Important Bank (D-SIB).
In terms of Public Sector Undertaking (PSU) Bank of Baroda, Canara Bank and Punjab National Bank had raised equity capital in 2020-21 (FY21).
In the Financial year 2022, it is expected that Credit growth picks up, although the recent rise in covid-19 infections and local lockdowns as a method to curb it might pose a challenge to the nascent recovery.