In H2FY25, banks would raise equity capital of Rs 40,000 crore to strengthen their balance sheets.
Banks managed by the state Leading the fundraising efforts are Bank of Maharashtra and Punjab National Bank, each aiming to raise Rs 7,500 crore.
Based on information gathered by The Economic Times, banks are preparing for a collective equity fundraise of almost Rs 40,000 crore in the second half of this financial year. The action is intended to promote expansion plans and enhance balance sheets.
State-owned banks are at the forefront
The boards of Punjab National Bank and Bank of Maharashtra have approved separate raises of Rs 7,500 crore each. In an effort to raise Rs 6,000 crore, Union Bank of India is looking into possibilities including qualified institutional placement (QIP).
The boards of Punjab National Bank and Bank of Maharashtra have approved separate raises of Rs 7,500 crore each. In an effort to raise Rs 6,000 crore, Union Bank of India is looking into possibilities including qualified institutional placement (QIP).
Furthermore, managing director and CEO Swarup Kumar Saha told PTI at the end of last month that Punjab & Sind Bank intended to collect Rs 2,000 crore through QIP to fund commercial growth, with merchant bankers anticipated to be onboarded by August.
Shareholder approval pending
It is anticipated that the forthcoming annual general meetings of PNB, Union Bank of India, Bank of Maharashtra, and Central Bank of India will seek shareholder support for these fundraising efforts.
The news broadcast emphasized the pressing need for funding, especially for Punjab National Bank, which has shown a robust 5% consecutive growth. The need to raise money is clear given that the government owns more than 75% of certain banks and that others, like RBL Bank and AU Small Finance Bank, require expansion capital.
It is anticipated that this equity fundraising will allow banks to grow by up to 12 percent, even in the event that internal accruals only grow by 8 to 10 percent.
This calculated action coincides with favorable market conditions, guaranteeing that banks can profit from premium values in order to obtain the required capital.
