State Bank of Mysore (SBM), in which parent State Bank owns 90 per cent stake, today said it will be hitting the capital markets to raise about Rs 450 crore in FY16 by issuing fresh shares through QIP.
The move is aimed at shoring up the government lender's capital base for future growth as well as to meet the 75 per cent public float norms of the regulator Sebi.
"Though we have time till August 2107 to meet the Sebi's public shareholding norms, we want to tap the market this fiscal itself as there are many other banks and public sector entities rushing to the market to offload their shares.
"We hope to raise Rs 400-450 crore by issuing fresh shares to the public through a QIP issue or other means. But we are not looking at a rights issue," SBM Managing Director Sharad Sharma said to a select group of journalists while announcing the Q4 and annual earnings here.
He said the parent State Bank, and not the Government, infuses capital in SBI subsidiaries. However, SBI had not done so in the past two years. Currently, SBI holds 90 per cent in Bengaluru-based lender.
Sharma said in 2013-14, the bank raised about Rs 68 crore by diluting 3 per cent through a share sale to meet the Sebi norm of 10 per cent public holding.
The bank's total capital base stood at 11.42 per cent under Basel III, with the core capital at 8.36 per cent and for the current fiscal, it is adequately capitalised, he said.
"If credit growth picks in the later part of the year, then we may need more capital. Anyway I don't see credit picking up in the first half of the current fiscal," he said, adding in the just concluded fiscal SBM's mainstay corporate loans saw a minor de-growth.
Corporate loan book constitutes 55 per cent of its total advances, which was 65 per cent a year ago, while retail advances increased 19 per cent in FY15, of which 51 per cent is housing loans.
For FY15, its provision coverage ratio improved from 59.5 per cent to 69.3 per cent.
For the quarter ended March, the bank reported a 27 per cent rise in net profit at Rs 136 crore on recoveries and a steep fall in bad loans.
