DCB Bank plans to raise up to Rs 1,000 cr via equity, debt instruments

DCB Bank is planning to raise up to Rs 1,000 crore through equity and debt instruments and will seek shareholders' approval in its ensuing annual general meeting (AGM) next month.

The private sector lender's AGM will take place on July 11 through video conferencing (VC) and other audio-visual means, DCB Bank said in its annual report 2019-20.

The bank plans to raise up to Rs 500 crore by issue of equity shares to qualified institutional buyers through qualified institutional placement, and an equal amount is slated to be raised by issuing bonds, debentures or securities on a private placement basis, DCB Bank said in the annual report 2019-20.

On fundraising via equity share issuance, it said the board of directors will seek consent from shareholders "to create, offer, issue and allot in one or more tranches by way of a qualified institutions placement of equity shares to qualified institutional buyers... for an aggregate amount not exceeding Rs 500 crore," DCB Bank said.

"The risk-weighted assets of the bank are expected to rise with an increase in the business level. In this backdrop, the bank proposes to shore up its capital base through the issue of equity shares," it added.

Assuming maintenance of a conservative ratio of 11.5 per cent capital adequacy on incremental assets, the proceeds of the issue of equity shares would enable the bank to add Rs 4,348 crore of risk-weighted assets, DCB Bank said.

Besides, the bank said it will seek shareholders' approval, as a special resolution, at the AGM for raising of funds in Indian or foreign currency by issue of debt securities in domestic and/or overseas market, on a private placement basis of an amount not exceeding Rs 500 crore.

The fundraising, it said, would be for a period of one year in one or more tranches.

"The bank has been borrowing funds to meet the business requirements within the limits approved by the members by way of issuance of various debt securities," it said.

Further, considering the features of the revised guidelines issued by the Reserve Bank of India on the issue of long-term bonds or Basel-III tier-I and -II bonds and the fact that these bonds will also assist the bank in reducing asset-liability mismatches, the board of directors has proposed to obtain the consent of the members of the bank for raising funds in Indian/ foreign currency by issue of debt securities.

The bank had posted a net profit of Rs 338 crore in 2019-20, up by 4 per cent from Rs 325 crore in the previous financial year.

Income during the year grew by 10.5 per cent to Rs 1,656 crore as against Rs 1,499 crore in the previous financial year.