Thrissur-based South Indian Bank is seeking approval from its shareholders to raise funds by issuing 300 million equity shares at a premium, in order to meet its capital requirements.
The bank is considering various methods for the same —public issue, private placement, preferential issue, qualified institutional placement (QIP), Global Depository Receipts (GDR), Foreign Currency Convertible Bonds (FCCBs) or others, such as alternative investment fund/foreign portfolio investors (FPIs) or foreign corporate bodies (FCBs), in one or more tranches. It is also seeking approval to raise up to Rs 500 crore.
People in the know said the bank expects the fund raising to support its plan to grow its advances by 20 per cent. While it had received shareholders' approval for enabling a resolution to issue 200 million shares last year, it was not used considering the market condition.
The bank expects 20 per cent growth in advances this year from the Rs 63,636 crore registered in FY19. Then, the bank had reported 15.5 per cent growth in advances. It is focusing on the retail, agriculture and MSME sectors.
V G Mathew, managing director and CEO, said in the annual report that enhanced spending on infrastructure, speedy implementation of projects, and continuation of reforms are expected to provide further impetus to growth in FY20, suggesting there will be robust need for credit.
"The bank's strategy for FY20 is to further expand its retail franchise and improve operational efficiency, along with aggressive recovery of loans with a view to achieving healthy growth in retail, MSME and agricultural advances," he said.
The bank’s capital to risk weighted assets ratio (CRAR) as on March 31, 2019, stood at 12.61 per cent under Basel-III norms as against the regulatory requirement or the prescribed minimum of 10.875 per cent.
The bank added that with positive economic indicators, it expects to continue its robust growth trajectory in the medium-to-long term. With an objective to leverage the available business opportunities and to maintain appropriate regulatory capitalisation levels, the bank proposes to increase the issued and paid-up capital up to the extent of Rs 30 crore, by issuing up to 300 million equity shares of face value of Rs 1 each with such premium as the board may deem fit.