"The money would be raised though debt placement and bank guarantees over six months," said Managing Director Motilal Oswal.
The recent market meltdown has squeezed liquidity out of the stock brokers and their non-banking financial arms as volumes on the bourses have declined by 60 per cent from the peak during the start of this year.
Market experts believe that some of the other brokerage houses too would follow the move as the industry would require huge funds to overcome their current market turbulence and expand aggressively.
MOFSL had raised Rs 267 crore just nine months ago after the success of its initial public offer. As on March 31, 2008, Rs 192 crore was utilised by the company and the rest is lying in mutual funds.
Oswal said the money raised through bank guarantees by MOFSL would be required to fulfil the margin requirements by the stock exchanges.
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Stock exchanges, as part of their risk management, would ask brokers to deposit a certain amount of margin and trading limits would be set depending on the kind of margin money that the brokers deposit.
While the current debt capital of MOFSL is only 50 per cent to its equity capital, Oswal said they would take the ratio to a maximum of 1:1.
The Reserve Bank of India guidelines allow financial companies to raise nearly 10 times more debt compared to their equity capital.
MOFSL had initially planned to raise Rs 200 crore for its short-term debt programme but later enhanced it to Rs 400 crore. Credit rating agency Crisil has assigned highest rating of P1+ to the debt instruments, indicating