IDBI Bank to raise Rs 1500 via preferential allotment to LIC

IDBI Bank on Monday informed BSE that the Board of Directors of the Bank has approved the proposal for Preferential Issue of Capital to Life Insurance Corporation of India (LIC) aggregating up to Rs 1500 crore, subject to Government of India's approval.

LIC along with various other schemes currently hold 7.25 per cent stake in IDBI Bank. Last week, the bank also got board approval for raising up to USD 500 million through tier I bonds. The board has approved issuance of Basel III compliant Additional Tier 1 (AT 1) bonds in offshore markets up to USD 500 million to enhance tier 1 capital of the bank, the bank had said. Raising of funds will help IDBI in being able to maintain its capital adequacy targets which has gone down in the past quarters as the lender has been bogged down by the NPAs.

In an another development, according to certain media reports, IDBI Bank is planning to liquidate nearly half of its stake in the NSE, the country's largest bourse, before the end of the current financial year (March 31).

The move comes when the bank's profitability has eroded due to a rise in bad loans. Money mobilised through the stake sale will help the government-owned lender to augment its capital adequacy. IDBI currently owns nearly five per cent or 2.2 million shares in NSE, which is being pressurised by stakeholders to get listed.

However, raising of resources for capital adequacy to support the bank's growth will be a priority. It is widely expected that gains from NSE stake sale will provide IDBI bank with much needed capital in order to fuel its expansion plans and help improve its profitability which touched an all-time low in Q3.

IDBI Banks Q3 was by far the worst quarter for the bank. Bank posted a net loss of Rs 2184 crore. The net NPA stands at 4.6 per cent as against 3.16 per cent Q-O-Q. The bank’s provisions for the quarter rose to Rs 3722.67 crore from Rs 956.25 crore in the same period a year ago and Rs 1289.31 crore at the end of September.

The scrip opened at Rs 54 and touched an intra-day high of Rs 57.25, before closing the day with the gains of 3.46 per cent to Rs 56.80 on NSE.

The promoters holding in the company stood at 80.16 per cent while Institutions and Non-Institutions held 11.62 per cent and 8.22 per cent respectively.