NEW DELHI: Public sector Jammu and Kashmir Bank is looking to raise up to Rs 4,500 crore through equities and debt, according to its annual report.The bank will seek shareholders' approval for the fund raise proposal in its annual general meeting to be held on September 28, 2020, the lender said in its Annual Report 2019-20.The implementation of Basel III guidelines has necessitated the need for banks in India to augment their capital base.This becomes important as Basel III capital requirements call for increase in quantity and quality of capital, besides providing for capital buffer during economic downturn, the lender said in its report.In the light of the economic and business environment in India besides the downward pressures in the financial sector, increase in NPAs, slow growth in overall business variables, among others, the bank gauges the capital requirements for the near to medium term from time to time, it said.Based on these factors in the capital planning exercise … [Read more...] about J&K Bank plans to raise up to Rs 4,500 cr capital via equity, debt
Why fund raising
Adequacy indicators, such as import cover and short-term debt to reserves, remain the strongest in more than a decade - unlike for many EM peers.Indian firms obtained ECB (External Commercial Borrowings) sanctions worth $ 3.5 billion or an estimated Rs 26,000 crore in April-June'2020, show latest RBI data. This is about one-third of the sum - $11.9 billion-they borrowed in the same period a year ago.“Surging reserves and rising ammunition to keep the currency stable will provide corporates the optionality to look at foreign sources of financing, as borrowing costs overseas remain low,” said Rahul Bajoria, chief economist at Barclays India. "The rise in reserves is largely a reflection of a current account surplus augmenting capital inflows.”US 10-year Treasury Bill, a global gauge for pricing bonds, yielded 0.68 percent versus 1.88 percent at the beginning of this year. This should bring borrowers’ funding costs lower unless the risk perception changes. During … [Read more...] about India Inc likely to speed up foreign fund-raising plans
In July, Zomato had said its FY20 revenue jumped over two-fold to $394 million (around ₹2,960 crore) in FY20 from the previous fiscal, while its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) loss was at around ₹2,200 crore in FY2019-20. … [Read more...] about Zomato raises $160 million in funding from Tiger Global, MacRitchie Investments
MUMBAI: Raising long-term finance will continue to be a challenge for non-banking finance companies (NBFCs), although banks are willing to adopt a collaborative approach to help revive the sector.According to SBI MD Arijit Basu, NBFCs had stepped in to lend to small and medium enterprises when banks were not lending. “When the going was good, they were raising funds not just from banks but through the markets by issuing short-term commercial papers.” He said that this dried up because investors turned risk-averse . Speaking at the Ficci-IBA summit here, Basu said that banks needed to revive credit risks by engaging with NBFCs, including the smaller ones. “There is only one issue — as much as possible, NBFCs, even the smaller ones, need to be able to access long-term resources, which cannot just come from the banks. And that is a perennial problem in India,” said Basu. He added that although efforts have been made for long to deepen the bond markets, this … [Read more...] about Raising long-term finance to be tough for NBFCs: Bankers
Are funds really cheap?In the current market, funds are also available at a reasonable rate than what they were earlier. Despite the economy in the negative zone the market is performing well. This is encouraging for the bankers to raise funds. India being the focus market, foreign investors find Indian companies attractive. Banks just want to be extra cautious and make their books really strong for the next one year. Hence raising funds now, may help them encash the equity when the situation improves. In a different cycle today, the bankers don't have an issue with raising the funds. Reserve Bank of India has also reduced its rate drastically and the market is also open for banks. But what will certainly change the dynamics of the economy is how banks in the current environment, adopt innovation in analysing the risks. Because with current parameters, neither banks will be able to lend nor borrowers will qualify to apply. … [Read more...] about What makes banks borrow huge funds?