June 27, 2022
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South Indian Bank to seek shareholders’ approval to raise Rs 2,500 cr in July AGM

South Indian Bank (SIB), a private sector lender, intends to raise up to Rs 2,500 crore in order to strengthen its capital basis for commercial growth and comply with regulatory requirements. At the previous AGM for the previous fiscal year, the bank’s shareholders had approved this fund raising, but the bank did not actually raise the money.

According to SIB in a regulatory filing, a banking firm needs enough capital to cover both the needs of a growing business and the requirements of the relevant regulations. The lender will ask shareholders for permission at its upcoming annual general meeting (AGM), which is slated to take place on July 12, to raise tier-I capital of up to Rs 2,000 crore through the issuing of securities in a variety of ways.

In order to meet Basel III requirements, it would also ask approval to issue bonds through a private placement in order to raise an extra Rs 500 crore. “Capital needs to be increased as the business expands. In the medium to long term, the bank anticipates continuing its strong growth trajectory. One of the essential conditions for accomplishing this feat is the availability of sufficient finance.

“The bank seeks to raise additional capital aggregating up to Rs 2,000 crore or its equivalent amount,” the bank stated. “This is a proactive measure to utilise the current business prospects and for maintaining adequate regulatory capitalization levels. During the 93rd AGM on August 18, 2021, the bank has planned to issue new capital of up to Rs 2,000 crore.

Additionally, the lender announced that it would borrow money in Indian or foreign currencies by issuing Basel III compliant debt securities through a private placement in one or more tranches for a sum not to exceed Rs 500 crore, as long as it stayed within the bank’s overall borrowing limits, which were approved by the bank’s members.

“The board of directors has suggested to get the members’ agreement to borrow/raise money in Indian/foreign currency through issuing of debt securities including but not limited to non-convertible debentures, bonds, up to Rs 500 crore in one or more tranches in domestic and/or international market,” it stated. Similarly, in the previous AGM held in August 2021, the lender received approval from shareholders for this capital raise. It did not, however, obtain any loan capital between 2021 and 2022, therefore new approval is required for the same.

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