Bank of Maharashtra to raise ₹1,000 crore bonds by December end, says CEO
2 min read . Updated: 20 Aug 2020, 01:53 PM IST- The bank is targeting a loan growth of 10-12% in the FY21 and believes it can be achieved with the existing level of capital
MUMBAI: State-owned Bank of Maharashtra plans to raise ₹1,000 crore in bonds by the end of December as it looks to ramp up its capital buffers.
“Probably we will raise these bonds either during the current quarter or the next quarter and will target ₹1,000 crore. The bonds could be raised by Q3 and will be a mix of both tier II and additional tier I (AT-1) instruments," the bank’s chief executive A S Rajeev told Mint in an interview.
The bank’s total capital adequacy under Basel III stood at 13.21% as on 30 June, of which the common equity tier I (CET I) was at 10.23%. Its board has recently approved raising ₹3,000 crore of capital in a mix of equity and bonds.
“This includes ₹2,000 crore of equity capital and the rest in bonds. Next financial year we are thinking of either a qualified institutional placement (QIP) or some other mode of equity raising," said Rajeev.
He added that the bank is targeting a loan growth of 10-12% in the FY21 and believes it can be achieved with the existing level of capital. The bank’s tier I capital, Rajeev said, is adequate for the next one-two years, besides enough cushion is available for raising capital through tier II instruments as well.
Based in Pune, which is one of the biggest epicentres of covid-19 in Maharashtra, the bank had to take measures to safeguard its staff and customers. Rajeev said that around 97% of branches and 90% of the bank’s automated teller machines (ATMs) remained operational amidst such disruptions.
“The bank is in the process of initiating an alternative technological mode of working system where maximum employees will be allowed to work from home," said Rajeev.
Bank of Maharashtra exited Reserve Bank of India’s (RBI) prompt corrective action (PCA) in January 2019 and Rajeev said the bank has taken some strategic and structural measures to improve its financial parameters.
“We have made additional provision on bad loans in excess of the minimum prescribed provisions. Moreover, the recovery to the tune of ₹1,800 crore during FY20 has also helped the bank to reduce its NPA level," he said, adding that the bank is also giving priority to small bad loan accounts of up to ₹500,000 by extending compromise offer on liberal terms.
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