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Manipal-headquartered public sector lender Syndicate Bank on Tuesday said it plans to raise up to Rs 2,000 crore by way of qualified institutional placement (QIP) issue, rights issue, follow on public issue or any other mode approved by the government of India, Reserve Bank of India to augment its capital base and cater to its increasingly growing business level and to comply with the Basel-III norms.
The Bank intends to raise funds either in one or more tranches, the Bank said in a filing to BSE.
The Bank has also planned to raise Basel-III compliant Additional Tier-I Bonds up to Rs 1,800 crore and Tier-II bonds up to Rs 1,750 crore at coupon rates as per prevailing market conditions. The Bank has proposed to move a resolution to seek shareholders approval for its fund raising plans during the annual general meeting scheduled on June 26, 2015. Apart from the approval of the shareholders, the issue of equity shares by way of Qualified Institutional Placement would be subject to compliance of all statutory, regulatory or any other applicable guidelines in this regard.
As per RBI prescribed Basel-III Capital guidelines, minimum CRAR is to be maintained at 9%. Banks have to progressively increase this ratio to 11.50% including Capital Conservation Buffer (CCB) from the year 2016 onwards. Syndicate Bank also needs to maintain Leverage Ratio at 4.50%, as per RBI guidelines. Higher capital, particularly Tier-I capital is needed in view of the RBI guidelines on risk weights on various categories of assets and business growth projected for the current year and in the coming years.
The capital adequacy ratio under Basel-III stood at 10.54% as against 11.41% in March 2014. The return on assets on annual basis has slipped to 0.58% from 0.70%.
