InvestorQ : What are the fund raising plans of DCB Bank and how do they propose to use these funds?
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What are the fund raising plans of DCB Bank and how do they propose to use these funds?

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4 months ago
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DCB Bank plans to raise Rs.1000 crore through the issue of equity and debt instruments and approval for the same is proposed to be sought at the AGM on July 11. This has been mentioned in the annual report for fiscal year 2019-20. DCB Bank plans to raise up to Rs 500 crore by issue of equity shares to qualified institutional buyers via QIP.

Apart from the equity component, an equal amount is slated to be raised by issuing bonds, debentures or securities on a private placement basis. These will be in the form of non-convertible, redeemable debt instruments. The idea of fund raising is to build capital buffers as the risk-weighted assets of the bank are expected to rise with the business level.

If the bank looks to maintain 11.5% bare minimum capital adequacy on incremental assets, the equity issue will enable the bank to add Rs.4348 crore of risk-weighted assets. The debt component may be raised in domestic or foreign currency based on market conditions. This is intended to help DCB Bank meet the post lockdown spurt in credit demand.

In line with revised RBI guidelines DCB may also look at issue of long-term bonds or Basel-III tier-I and tier-II bonds to reduce asset-liability mismatches. In a touch quarter, DCB bank had posted good numbers in the mar-20 quarter with net profit up 4% at Rs.338 crore and total income up by 10.5% at Rs.1656 crore.

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