Bank's board approves fund raising via debt instruments.
The recent hike in short term lending and borrowing rates by the Reserve Bank of India (RBI) may come as a dampener for the private sector lender, Axis Bank Limited, which may face pressure on the margins, hinted the top executive of the bank at the annual general meeting (AGM) held here on Friday.
Speaking to the mediapersons after the AGM, Shikha Sharma, managing director and CEO, Axis Bank maintained that the RBI's move may prove as a dampener for the company's margins.
Even as the RBI move was seen as an effort to curb the inflation, which has remained over nine per cent for the month of May, the rate hike may put pressure on the margins of the bank.
The inflation level has been much above the apex bank's comfort level of 5-6 per cent. On Thursday, the RBI had raised key short-term lending (repo) and borrowing rates (reverse repo) by 25 basis points each, a hike for 10th time since March, 2010. The repo rate has been raised to 7.5 per cent, while the reverse repo rate has been raised to 6.5 per cent.
Meanwhile, all the resolutions put on agenda for the meeting have been passed by the shareholders at the AGM.
The bank will also raise funds via debt instruments. The board of directors of the bank has approved borrowing/raising of funds by issue of debt instruments on private placements basis within the limits permitted by RBI and other regulatory authorities from eligible investors, in one or more tranches.
Accordingly, as per the business plan for the year, bank proposes to raise the funds in domestic and/or overseas market, eligible for inclusion in Tier I and Tier II capital.