Vijaya Bank plans to raise about ₹600 crore capital to fund its business growth, V Kannan, Chairman & Managing Director, has said. The capital raising could happen either through qualified institutional placement, follow-on public offer or rights issue.

This public sector lender has sought shareholders’ approval for the same at the upcoming AGM on June 27.

Prefers QIP route

“We are taking an enabling resolution from our shareholders. QIP is the preferred option for us. The timing of the capital raising will depend on the market conditions,” Kannan told Business Line .

Until end-March, Vijaya Bank was not looking to raise capital from the market. But the recent rise in its share price at the bourses has prompted this public sector lender to look at raising capital from the market.

As on end March 31 this year, the Centre held 74.06 per cent stake in the bank.

Plea for ₹1,000 cr

Vijaya Bank has already requested the Government to pump in ₹1,000 crore as common equity tier-1 capital in order to achieve the targeted capital adequacy ratio of 10.50. The Centre had in the interim budget in February allocated ₹11,200 crore for infusion in various public sector banks (PSBs). With competing demands for resources, it is unlikely that the Centre would meet all the requests made by PSBs.

The erstwhile UPA Government had urged PSBs to use retained earnings or raise external capital from the market to support business growth. With the bank unlikely to get the entire amount of ₹1,000 crore requested for, it has now started looking to the market for capital to fund business growth.

For the year-ended March 31, Vijaya Bank clocked a net profit of ₹416 crore.

The Finance Ministry is likely to endorse Vijaya Bank’s capital-raising plan (from the market) as the Government is not averse to bring down its holding in public sector banks up to 58 per cent.

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