Banks to equity fundraise Rs 40,000 crore in H2FY25 to boost balance sheets

State-run banks Punjab National Bank and Bank of Maharashtra are leading the fundraising with both seeking Rs 7,500 crore each

In the second half of this financial year, banks are gearing up for a collective equity fundraise of approximately Rs 40,000 crore, according to data compiled by The Economic Times. The move aims to strengthen balance sheets and support expansion plans.

State-run banks leading the charge

Punjab National Bank and Bank of Maharashtra have both secured board approval to raise Rs 7,500 crore each. Union Bank of India is exploring options such as qualified institutional placement (QIP) to raise Rs 6,000 crore.
 

Central Bank of India and AU Small Finance Bank are also preparing to raise Rs 5,000 crore each through QIPs. AU Small Finance Bank is further planning to raise an additional Rs 6,000 crore through debt financing. Meanwhile, RBL Bank is set to raise Rs 3,500 crore via institutional placement, marking its first share issue since 2021, along with plans to raise another Rs 3,000 crore through debt securities via private placement.
 

Additionally, Punjab & Sind Bank plans to raise Rs 2,000 crore through QIP to fund business growth, with merchant bankers expected to be onboarded by August, managing director and CEO Swarup Kumar Saha told PTI at the end of last month.

Shareholder approval pending

Shareholder approval for these fundraisings are expected to be sought at upcoming annual general meetings for PNB, Union Bank of India, Bank of Maharashtra, and Central Bank of India.
 

The news report highlighted the urgent need for funds, particularly for Punjab National Bank, which has seen a strong sequential growth of 5 per cent. With government shareholding above 75 per cent in some banks and others like RBL Bank and AU Small Finance Bank needing growth capital, the push for raising funds is evident.

This equity fundraise is expected to enable banks to grow upwards of 12 per cent, even if internal accruals sustain a growth of 8-10 per cent.

This strategic move comes at a time when the market conditions are favourable, ensuring that banks can capitalise on premium valuations to secure the necessary funds.