Bank of India plans to raise up to Rs 2,500 cr equity capital in FY23

Lender could look at options such as QIP, FPO and preferential issue

Public sector lender Bank of India plans to raise fresh equity capital of up to Rs 2,500 crore in the current financial year (FY23) for business growth.

Its board is slated to meet on April 25, 2022 to consider a capital raising proposal by way of a further issue of equity shares, BOI informed BSE.

It could look at options including qualified institutional placement (QIP), follow-on public offer and preferential issue of shares.

The bank's capital adequacy ratio stood at 16.66 per cent in December 2021, up from 12.51 per cent in December 2020.

For nine months (April-December 2021), net profit rose to Rs 2,798.4 crore from Rs 1,910.1 crore in the same period in the last financial year (FY21).

In September 2021, it had raised Rs 1,800 crore in capital through tier II bonds. In August 2021 it tapped institutional investors to raise Rs 2,550 crore in equity capital. Prior to it in March 2021, the government of India infused Rs 3,000 crore as capital through zero coupon bonds (ZCB).  

The Reserve Bank of India had flagged concern at the recapitalisation of public sector banks through zero-coupon bonds (ZCBs). The discounting, to be done by fair-value method, could halve the bonds' value to about Rs 1,500 crore.

BOI has maintained that it can absorb any burden of marking down recapitalisation bonds issued in lieu of equity shares to the government without fresh capital infusion.