ICICI Bank, the largest lender by market capitalisation, is nearly doubling its borrowing limit to Rs 2,00,000 crore, largely to fund expansion of its international business. The bank is also proposing to seek an enabling authorisation from its shareholders to issue depository receipts (DRs) against preference shares, subject to legal and regulatory amendments. The bank's borrowing limits linked to Tier-1 capital has increased following the just-concluded Rs 20,000 crore domestic and American Depository Receipts (ADR) issues. The bank's net worth has increased to about Rs 44,500 crore from over Rs 24,300 crore as on March 31, 2007. In a notice to the shareholders for its thirteenth annual general meeting on July 21 in Vadodara, ICICI Bank explained that the bank would need to borrow more it has identified international business as one of the key growth drivers. The expected growth in its international banking group would entail higher funding requirement. The bank had last increased its borrowing limit on May 3, 2002 to Rs 1,03,550 crore from Rs 3,000 crore set on June 15, 1998. In a resolution on capital requirements, the bank said it will require additional capital to allocate for operational risk under the revised capital adequacy norms called Basel II. Apart from more sophisticated ways of allocating capital for credit and market risk, Basel II norms require banks to provide about 12% of total income as capital for operational risk. Subject to the necessary amendments to the Banking Regulation Act and changes in the government scheme for issue of foreign currency convertible bonds (FCCB), the bank plans to issue overseas DRs and FCCBs against preference shares. The RBI has allowed issue of perpetual non-cumulative preference shares, which would be eligible for inclusion as Tier 1 capital, which now includes equity, reserves and perpetual bonds.
