Private sector lender HDFC Bank informed the exchanges on Monday that it is looking to raise up to Rs 50,000 crore over the next twelve months through various instruments such as by issuing perpetual debt instruments for additional tier I capital, tier II capital bonds, and long-term bonds for financing of infrastructure and affordable housing.
The banks’ board will consider the proposal of raising funds by the bank on April 16. “The board of directors would consider this proposal at its ensuing board meeting to be held on April 16, 2022”, the bank said in its exchange notification.
As of the December quarter, the bank’s capital adequacy ratio (CAR) as per Basel III guidelines was at 19.5 per cent as against a regulatory requirement of 11.7 per cent. Tier 1 CAR was at 18.4 per cent and common equity tier 1 capital ratio was at 17.1 per cent.
Earlier this week, the bank announced that its parent company, mortgage financier HDFC Ltd will merge into it, subject to regulatory approvals, thus creating a banking behemoth with around Rs 18 trillion of loan assets.
Analysts have estimated that the merger would call for an additional statutory liquidity ratio (SLR)/cash reserve ratio (CRR) burden of Rs 1.02 trillion and priority sector lending (PSL) of Rs1.17 trillion (assuming CRR/SLR/PSL ratios for merged entity similar to HDFC Bank).
The bank management had indicated that the proposed merger with HDFC will create a large balance sheet and net-worth, which would also enable underwriting of larger ticket loans, including infrastructure loans.