Bank of India plans to raise Rs 6,500 crore in FY24 to fund its growth

State-run lender Bank of India (BoI) will seek approval from its board to raise Rs 6,500 crore capital in the current financial year to fund its growth. The bank’s board will meet on April 18 to approve the fundraising plan, the lender informed the exchanges.

The bank will raise Rs 4,500 crore as equity capital and Rs 2,000 crore via bonds. The bank will explore all options, including follow-on public offer, rights issue, and additional tier-1 bonds, for raising the capital.

“…the meeting of the board of directors of the company is scheduled on 18/04/2023, inter alia, to consider and approve a) By issue of fresh equity capital in the form of FPO/QIP/right issue/preferential issue and/or Basel-III compliant additional tier-1 bonds (domestic & foreign currency) up to Rs 4,500 crore… b) By issue of Basel-III compliant tier-2 bonds up to Rs 2,000 crore,” the bank said.

BoI, which has over 5,000 branches across the country, had a capital adequacy ratio of 15.6 per cent, with common equity tier-1 capital of 12.77 per cent, including capital conservation buffer. Till December 31, the bank reported a robust credit growth of 16.08 per cent year on year.

BoI had raised Rs 1,500 crore capital through additional tier-1 bonds in the third quarter of the previous financial year.

Banks clocked a healthy credit growth in FY23 — of about 15 per cent, the highest in a decade. Banks expect the momentum to continue in the current financial year, too. As a result, they will need capital to support the credit growth.

State Bank of India – the country’s largest lender – had said the bank’s executive committee of the board will meet on April 18 to consider raising $2 billion by overseas bonds. HDFC Bank, the country’s largest private-sector lender, is also planning to raise up to Rs 50,000 crore through bonds including additional tier (AT) I, tier II, and infrastructure bonds in the next 12 months.