KOCHI: Federal Bank’s board on Friday cleared a capital-raising proposal worth Rs6,196.51 crore, setting the stage for the lender to strengthen its balance sheet and fund future growth.
The board approved the issue of 27.29 crore warrants at Rs227 each to Asia II Topco XIII, a private investor, with each warrant convertible into one equity share of the bank.
Under the terms of the issue, 25 per cent of the price will be payable upfront at the time of subscription, and the remaining 75 per cent will be due at the time of conversion into shares. Once all warrants are exercised, the investor will be eligible to nominate one non-executive director to the board, provided it continues to hold at least 5 per cent of the paid-up capital.
The move, analysts said, signals the bank’s intent to build a stronger capital buffer as credit growth remains healthy and competition for deposits intensifies.
The infusion will help Federal Bank maintain comfortable capital adequacy, support loan expansion, and invest in technology and digital initiatives amid a softening interest-rate cycle.
A banking analyst added that the additional equity would also give the lender flexibility to pursue strategic opportunities or partnerships without immediate leverage pressure.
Federal Bank will seek shareholder approval for the preferential issue and related matters at an extraordinary general meeting scheduled for 19 November 2025.
Federal Bank, which operates across treasury, wholesale, retail and other banking operations, had 1,595 banking outlets and 2,082 ATMs, including mobile ATMs, as of  September  30, 2025.
The lender’s net profit declined 9.6 per cent year-on-year to Rs955.26 crore in Q2 FY26, even as total income grew 3.75 per cent to Rs7,824.33 crore, reflecting margin pressures common across the sector.
