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Axis Bank, country’s third largest private bank, on Monday said it will raise Rs 5,000 crore by issuing non-convertible debt securities.
The bank proposes to "raise funds by issuing unsecured Redeemable Non-Convertible Subordinated Debentures, Basel- III Compliant Tier 2 Debentures (Series 27) of the face value of Rs 10 lakh each for cash at par aggregating to Rs 5,000 crore, Axis Bank said in a regulatory filing on stock exchanges.
The fund raising will take place after approval from the bank’s Board.
In December 2016, Axis Bank raised Rs 3,500 crore by selling perpetual bonds, becoming the first bank to do so.
The new fund raising will help the bank boost its capital buffer and meet the Basel III requirements as mandated by RBI.
According to Basel-III norms, which kick in from March 2019, Indian banks need to maintain a minimum capital adequacy ratio (CAR) of 11.5 percent including capital conservation buffer in the form of common equity.
Axis bank’s CAR as on March end 2017 stood at 14.95 percent, with a tier-I ratio at 11.87 percent while tier II at 3.08 percent.
CAR determines the financial health of a financial entity to absorb losses against risky business assets.
Last year, Axis Bank had raised Tier-II capital of Rs 2,430 crore and Rs 1,800 crore mobilized through issuance of subordinated debt during Q1 and Q3, respectively.
Tier II capital consists of some reserves and certain types of subordinated debt.
For the fourth quarter ended March 2017, Axis Bank had reported 43 percent decline in net profit to Rs 1,225 crore due to higher provisioning for bad loans, which rose sharply.
It had posted a net profit of Rs 2,154 crore for the January-March quarter of the previous fiscal, 2015-16.
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