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Bank of Maharashtra (BoM) is likely to raise between ₹500 crore to ₹700 crore via the qualified Iinstitutional placement (QIP) route in the current quarter (Q4FY22) and up to ₹1,000 crore through follow-on public offer (FPO) next financial year.
AS Rajeev, MD & CEO, BoM, said the purpose of the QIP and FPO is to shore up capital from sources other than the Government and diversify the investor base to meet SEBI’s minimum public shareholding (MPS) norm of 25 per cent.
Though the minimum regulatory capital to risk-weighted assets ratio (CRAR) required to be maintained by the Pune-headquartered public sector bank for the half-year ended September 30, 2021, was 10.875 per cent, it maintained this ratio higher at 14.67 per cent (excluding current year profit), following capital raise of Rs 403.70 crore through QIP in July 2021 at ₹23.70 per share.
Rajeev observed that his Bank’s Board has taken a conscious decision that the minimum CRAR should be 150 basis points above the regulatory minimum of 11.50 per cent applicable from October 1, 2021. One basis point is equal to 0.01 per cent.
He emphasised that capital is required to support 18-20 per cent year-on-year loan growth over the next couple of years so that the Bank can reach the target of ₹5 lakh crore in total business (deposits plus advances) by March-end 2024.
The Bank’s total business (deposits plus advances) stood at Rs 3,15,666 crore as of December-end 2021, per its latest business update.
The Government’s shareholding in BoM is at 90.97 per cent.So, to comply with SEBI’s MPS norm, the minimum public shareholding needs to go up from 9.03 per cent to 25 per cent.
Rajeev noted that following the cut in home loan interest rate to 6.40 per cent (against 6.80 per cent earlier) with effect from December 13, 2021, BoM has been able to increase its home loan book by around ₹750 crore.
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