Bank of Maharashtra plans to raise Rs 2,000 crore via AT1, Tier II bonds

Another equity offering on cards

Bank of Maharashtra plans to raise upto Rs 2,000 crore in capital through additional tier I bonds (AT1) and tier II bonds to support growth and replace capital bonds maturing through the financial year.

The government has approved issuance of AT1 bonds upto Rs 2,000 crore. Besides AT1 bonds, the bank would also look to raise Rs 1,000 crore through tier II bonds, subject to market conditions, said V P Srivastava, its chief financial officer.

Bank is also likely to go for another round of equity offering either at the end of the current financial year (Fy24) or early next year (Fy25). 

Bank would like to maintain Capital adequacy at 17 per cent or above to support growth in business and also reduce government stake in public sector lender, he said. 
 

Pune-based lender’s capital adequacy stood at 18.07 per cent with tier I of 14.36 per cent at end of June 2023.

In June 2023, banks raised Rs 1,000 crore in equity capital through Qualified Institutional Placement (QIP) from institutional investors. It issued 350.87 million shares (of face value Rs 10 each) at a premium of Rs 18.5 per share.

The equity capital expansion brought down the government of India’s stake from 90.97 per cent in March to 86.47 per cent in June 2023. According to Securities and Exchange Board of India’s rules, the public holding should be atleast 25 per cent. The market regulator has given time till August 2024 to meet regulatory norms.

In April, its board of directors gave a nod to  raise capital upto Rs 7,500 crore through various routes including follow-on Public Offer (FPO), Rights issue, Qualified Institutional Placement (QIP) or BASEL III compliant bonds.