HDFC Bank board approves raising up to Rs 24,000 crore

The Board of Directors of HDFC Bank has approved raising up to Rs 24,000 crore through issue of shares, the bank informed the exchanges on Wednesday.

Of the total, Rs 8,500 crore will be raised through a preferential issue of shares with a face value of Rs 2 each to parent Housing Development Finance Corporation, HDFC Bank said.

The remaining Rs 15,500 crore could be raised through a qualified institutional placement of shares and through issues of American Depository Receipts (ADRs) or Global Depository Receipts (GDRs).

If the entire amount is raised, it would tentatively boost the bank's capital adequacy ratio, which was 15.1 percent as on September 30, by another 2.5-3 percent, said a senior bank official.

"Growth is always required and being a large bank we need to raise capital. The capital should suffice for the next 5 years at least," the official said.

The bank will seek the approval of its shareholders for the same at the extraordinary general meeting scheduled to take place on January 19.

The issue of shares to HDFC is a result of the parent looking to maintain its stake in the bank, which is currently around 21 percent.

“... In HDFC Bank, the amount of infusion will depend on the amount of stock options the bank has outstanding, the price at which the bank does the issue as per the SEBI regulated price and so the cap is Rs 8,500 crore. It could be now or early part of next year, depending on the bank’s requirements,” said Keki Mistry, Vice Chairman and CEO of HDFC.

According to various media reports, HDFC bank is hitting the market for funds because at current prices, it would be able to raise a sizeable amount of money.

In an interview to ET Now, Deven Choksey opined that it was likely because the bank was looking to promote some of its new businesses and is seeing an opportunity there.