HDFC Bank to raise up to ₹50,000 crore via private placement of bonds

The bank’s board would consider this proposal at its meeting on 17 April, India’s largest private lender said in a regulatory filing.

“…we wish to inform you that the bank proposes to raise funds by issuing perpetual debt instruments (part of additional tier I capital), tier II capital bonds and long-term bonds (financing of infrastructure and affordable housing) up to total amount of ₹50,000 crore…” it said in its statement.

This comes a couple of days after Reserve Bank of India (RBI) governor Shaktikanta Das met bank chiefs and emphasised the need for raising adequate capital for strengthening balance sheets. To be sure, HDFC Bank is well above minimum regulatory requirements.

The bank’s total capital adequacy ratio under Basel III guidelines stood at 18.9% as on 31 December 2020, as against a regulatory requirement of 11.075%, including capital conservation buffer of 1.875%, and an additional requirement of 0.2% on account of it being a Domestic Systemically Important Bank (D-SIB).

Meanwhile, some large banks like some Bank of Baroda, Canara bank and Punjab National Bank have raised equity capital in FY21. Credit growth is expected to pick up in FY22, although the recent surge in covid-19 infections and local lockdowns to contain it might pose a challenge to the nascent recovery.