Union Bank of India plans to raise up to Rs 4,900 crore in equity in the second half of the current financial year to support its loan growth plans.
The board of directors approved its capital-raising plan for FY20 at its meeting on Wednesday.
Rajkiran Rai G, managing director & chief executive of the bank, said the board had set an overall capital-raising limit of Rs 6,000 crore for FY20. With this limit, the lender also has the option of raising up to Rs 4,200 crore through additional tier-I and tier-2 bonds.
Shareholders' nod for raising equity capital will be sought at its annual general meeting on June 28.
Rai said the bank might not need capital in the first half ending September 30, 2019. It might look at tapping the market in the second half. It could tap routes like follow-on public issue, rights offering or Qualified Institutional Placement (QIP).
The bank's global advances rose 3.7 per cent to Rs 3.25 trillion in FY19. It has guided for 9-11 per cent growth in loans during the current financial year.
Meanwhile, Union Bank's shares declined over 10 per cent after the company's net loss widened to Rs 3,370 crore in the fourth quarter of FY19.
Its net loss stood at Rs 2,583 crore in January-March 2018. The stock closed 10.03 per cent lower at Rs 71.30 on the BSE.
The bank posted a net loss due to higher provisions it had to make in the fourth quarter as the RBI asked the bank to reclassify existing gross non-performing assets (NPAs) from a back date. These loans were already treated as NPAs by the bank.