HDFC Bank looks to raise ₹13,000 cr via QIP, ADRs

MUMBAI: HDFC Bank Ltd, India’s most valuable lender, plans to raise as much as ₹13,000 crore through a combination of sales of shares to institutional investors in India and American Depositary Receipts (ADRs) in the US, two people familiar with the development said.

The country’s largest private bank is expected to raise funds in the third quarter of 2020-21, the people said, joining a list of Indian banks that are queueing up to raise capital to shore up capital buffers amid the Covid-19 pandemic. “The plans are at a nascent stage as we are observing the situation as it evolves under the ongoing circumstances due to Covid-19,” one of the two people said on condition of anonymity.

Banks are preparing for a surge in bad loans after a sixmonth moratorium on loan repayments ends on August 31. The moratorium was extended by three months in May to provide relief to companies that had to idle factories and offices under a government-imposed lockdown. “The effect of the crisis will reflect in books after September.

So, the money will be raised most likely in the early third quarter of this financial year,” said the first person. “The impact of the loan moratorium and slowing credit growth will start showing on the books of most of the large banks, including HDFC Bank, from September or from the third quarter of this fiscal year. The capitalraising is aimed to strengthen the bank’s capital buffers and liquidity so that it is well-fortified to deal with any potential rise in slippages in the credit books,” the person said. An HDFC Bank spokesperson said, “As a matter of policy, we do not comment on market speculations.” Several banks are raising capital through fresh share sales to insulate themselves amid widespread apprehension that the prolonged lockdown will severely impair the capacity of many borrowers to repay loans.

THE BANK AIMS TO STRENGTHEN ITS CAPITAL BUFFERS FOR POTENTIAL SLIPPAGES ONCE THE LOAN MORATORIUM ENDS