Indian banks may raise USD 30 bn via bonds by Mar 2019: Report

Indian banks need around USD 90 billion additional capital by March 2019 and one-third of this amount is expected to be raised through bonds, says a report.
Indian banks are likely to become more active in the Additional Tier 1 (AT1) market in 2017, after issuing around USD 2.8 billion so far in 2016, rating agency Fitch said in a report.
It further said banks need around USD 90 billion in extra capital by March 2019 to support credit growth and meet steadily increasing regulatory requirements.
"Around one-third of this new capital is likely to be raised through AT1 issuance," Fitch said.

Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the RBI.
AT-1 bonds qualify as core or equity capital.
"We believe the Indian domestic market is unlikely to show the same sort of depth, and we have doubts that it will be able to absorb all of India's AT1 paper," the Fitch report said.
Indian banks would continue to favour domestic issuance in the short term -- given the cost advantage -- but some of the better-rated banks are likely to be encouraged to follow the example set by State Bank of India in 2016 and turn to the international market next year, it said.