Banks are preparing for increased demand for credit and raising capital

As business normalises again with the declining number of Covid infections, banks have started to work on their plans to raise capital.

The state-owned Indian Bank has launched a Rs 4,000 crore share sale to institutional investors, while the country’s largest lender, the State Bank of India, has been approved by its board of directors to raise Rs 14,000 crore through the issuance of additional Tier 1 capital procure. Calcutta-based Uco Bank also received board approval on Wednesday for the Tier 2 issuance of Rs 500 crore, in addition to prior approval of up to Rs 3,000 crore through the sale of shares.

Annual non-food credit growth was 5.7% on June 4, slower than 6.2% a year ago, according to data from the Reserve Bank of India showing risk aversion from both borrowers and the general public Reflect lenders. continue here.

We continue to believe that credit growth will pick up in the short term after the interruption of the short-term “second wave”, ”HDFC Securities said in a release earlier this month, warning that a sustained recovery in credit growth could be elusive until the investment cycle revives Uco Bank CEO AK Goel said loan demand is slowly recovering as various state governments lift the lockdown.

As in the previous months, credit demand is expected to come primarily from the private customer segment, while corporate demand is likely to be subdued. “The willingness of companies to make new investments is still low today, as the economy is still recovering from the devastating second wave. The investment scenario is cautious according to new investment announcements, which, according to CMIE, showed a 67 ° decrease in FY21, ”said SBI economic research on June 8th.

Meanwhile, Indian Bank left the floor of its QIP at 142.15 per share, while its fundraising committee will meet on Thursday to take one final call. Banks are in a better position to support credit growth this year with up to 12 public banks posting net income.

“In addition to commercial profits, the return to profitability was supported by lower loan provisions for its inherited bad assets after the high provisions in recent years,” said rating agency ICRA.

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