IDBI Bank to raise up to Rs 2,500 cr in equity capital

IDBI Bank will raise equity capital up to Rs 2,500 crore, including Rs  1,900 crore from the government and institutions like Life Insurance Corporation (LIC), to meet minimum regulatory capital requirements.

The board has approved the proposal for “preferential issue of capital to government of India and other financial institutions”, up to Rs 2,500 crore, subject to statutory and regulatory approvals, the public sector lender informed the BSE on Tuesday.

While the board discussed the capital plans, the issue of change of guard (managing director and chief executive K Kharat moving to head Indian Bank) was not on agenda. The bank is in discussion with institutional investors like LIC for raising equity, banking sources said.

The bank would hold shareholders’ meeting on April 27 to get nod for the capital raising plan. Its capital adequacy ratio (CAR) was 11.29 per cent at end of December 2016, with common equity tier-I of 7.24 per cent.

The bank has been reeling under losses due to the burden of provisions for large pool of stressed loans. It registered a net loss of Rs 1,958 crore during April-December 2016. The losses were about Rs 3,665 crore in 2015-16.

There has been no internal accrual in 2015-16 to strengthen capital base. This year is also expected to end in losses.