MUMBAI: ICICI Bank plans to raise up to Rs150 billion ($2 billion) in capital, even as the bank is preparing to witness an adverse economic conditions following the COVID 19 that has led to moratorium across the board.
In order to give effect to the fund raising plan, the board has constituted and authorized Issuance Committee of the Board to decide on the terms and conditions of the proposed fund raise.
The board proposal will have to be ratified at the forthcoming shareholder’s meeting.
Reports noted that several other banks have also announced or waiting to come out with capital boosting plans in a move to strengthen their capital base for an imminent rainy day.
The nation’s second largest private sector bank, with a paid up capital of Rs1294.76 crore and reserves (excluding revaluation reserves) at Rs10,98,365.15 crore (Rs10.98 trillion), will raise funds via shares or equity-linked securities, according to a filing on Wednesday.
Indian banks are strengthening their balance sheets in anticipation of increasing soured debts as the coronavirus debased businesses and left millions jobless.
There is also thinking in the banking industry that the stronger capital will also make it easier to boost lending once the fallout from the pandemic subsides and companies get back to production.
ICICI Bank has already raised about 31 billion rupees by diluting stakes in its publicly traded entities including ICICI Prudential Life Insurance and ICICI Lombard General Insurance, according to exchange filings.
ICICI Bank enjoys a capital adequacy ratio of 16.1 per cent as of March 31, 2020 with the support of a core equity capital ratio of 13.4 per cent. The shares of the bank closed at Rs368.60 on NSE Wednesday.
