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Karnataka Bank plans to raise up to Rs 6,000 crore debt capital during the current financial year. In the upcoming annual general meeting next month, the bank will seek shareholders’ approval. It has also issued 15 crore shares through a qualified institutional placement (QIP) to raise equity capital. The AGM is scheduled for September 2.
A bank borrows money to meet its business requirements in the normal course of business through various means and to meet its capital requirements, for its debt raise plan.
It is proposed to obtain the consent of the members of the bank for borrowing funds in Indian/foreign currency up to Rs 6,000 crore in the form of debt instruments, in one or more tranches, Karnataka Bank said in its annual report 2020-21.
The approval of the members will be sought to create and offer, for cash at such price that the “total number of fully paid-up equity shares to be issued shall not exceed 150,000,000 (150 million) equity shares, to be subscribed by QIBs,” the report added.
It will offer equity shares in one or more tranches.
“There is a need for onboarding institutional investors, the board has felt. The bank has started strategising initiatives. Apart from maintaining a sufficient capital adequacy ratio, it improves the bank’s risk appetite given the Covid-19 pandemic-led economic uncertainties.
The board of directors thought it fit to seek approval of the shareholders for augmenting capital through QIP, it said.
The private sector lender posted a net profit of Rs 482.57 crore in FY21, up by nearly 12% from a year ago. However, the total income was down marginally at Rs 7,727 crore.