Private sector lender Lakshmi Vilas Bank plans to raise ₹700-1,000 crore this fiscal. The bank’s proposal for merger with Indiabulls Housing Finance is pending with the Reserve Bank of India, and is keen on finding investors to meet its immediate capital requirements.
“I am looking at what I will do till I merge. The board has decided to allot 4.99 per cent to Indiabulls Housing Finance. The intention is to raise some more capital. It is not unlikely we will try to raise anywhere between ₹700 crore to ₹1,000 crore,” said Parthasarathi Mukherjee, Managing Director and CEO, Lakshmi Vilas Bank.
“I have to raise my capital and survive on my own,” he said.
If the lender manages to raise ₹700 crore to ₹800 crore, it would help improve its capital adequacy ratio top 12 per cent, and the CET would touch over 10 per cent.
“This capital will last us for two years at least. Thereafter, my sense is, our requirement for capital will be met through QIPs from time to time depending on the growth,” he said.
The lender is, however, open to raising capital from all routes – be it through a preferential allotment or QIP, if the market seems promising. “The idea is to raise it this financial year. Post this fiscal, I may not require it,” said Mukherjee.
Faced with large bad loans and net losses, the bank’s CAR stood at 7.72 per cent as on March 31, 2019, against 9.81 per cent a year ago. It also raised ₹459.59 crore from qualified institutional buyers in 2018-19. Though Tamil Nadu-based LVB continued to post a net loss in its fourth quarter results for 2018-19 that were released on March 28, Mukherjee is hopeful that the worst is now over and that it will turn profitable by the end of the current financial year.
“This is the first quarter in my memory where the recoveries were more than the slippages...Now the recoveries will progressively increase and slippages will come down. CASA continued to grow well. Bulk deposit dependence came down substantially. Fees business was robust,” he said, outlining the striking features of the quarterly results.
The bank posted a net loss of ₹264.43 crore for the quarter ended March 31, 2019, against a net loss of ₹373.49 crore in the same period a year ago.
No Plan B
Mukherjee is hopeful that the merger with Indiabulls Housing Finance will come through, stressing that there is no Plan B for the bank. “The process takes its own time. We are dealing with multiple regulators. In our case, it is the Reserve Bank of India, which is our regulator; we need approval from the Competition Commission of India, we will require approvals from the stock exchanges where we are listed, and then from SEBI, and, finally, of course, from NCLT, in addition to their regulator, the National Housing Bank,” he said.
The bank’s scrip on Thursday remained largely stable and closed at ₹73.55 apiece on the BSE.