Sanjiv Bajaj, MD, Bajaj Finserv in an interview with CNBC-TV18 spoke about its subsidiary Bajaj Finance which is raising additional funds to the tune of Rs 750 crore through qualified institutional placement (QIP) and a preferential issue.
Bajaj Finserv's capital adequacy currently stands at around 20%. "We like to work with a capital adequacy not less than about 15-16%. By the end of this year we should be close to the 15-16% number. That is why we have taken approval so that over the next few months we can go and raise this additional capital," he added. This fund raising is aimed at supporting business growth of Bajaj Finance over the span of next three years. Below is the verbatim transcript of Bajaj's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: Could you take us through what the quantum of this capital raising exercise is? Why you need to do it for Bajaj Finance? A: Yesterday, we got board's approval to raise Rs 750 crore of equity capital for Bajaj Finance. This will have to go through shareholders approval at the AGM next month. We last raised capital in Bajaj Finance about four years ago in 2007. It is actually a combination in 2006-07 of private placement and a rights issue. Our capital adequacy right now is still comfortable and we are close to 20%. We like to work with a capital adequacy not less than about 15-16%. We would like to keep a bit of buffer there for tight liquidity conditions. The regulatory requirement currently is around 12% or so and is expected to go up to 15%. By the end of this year we should be close to the 15-16% number. That is why we have taken approval so that over the next few months we can go and raise this additional capital to support the growth of the business over the next three years. Q: So this Rs 750 crores is a limit upto which you can raise or this is the entire amount you want to raise in one tranche? A: This is the entire amount that we want to raise. We have tried to estimate where the business can be over the next few years. Keeping in mind that we donDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
