Jammu and Kashmir Bank on Tuesday said it has received shareholders’ nod to raise up to Rs 4,500 crore through equity and debt to fund its business plan.
Besides, the shareholders also approved the proposal to increase the authorised share capital of the bank from Rs 95 crore to Rs 250 crore in its annual general meeting (AGM) held on September 28.
The AGM cleared the proposal to raise an amount not exceeding Rs 3,500 crore in one or more trenches by issue of securities by way of follow on public issue, rights issue, qualified institutional placement (QIP) or any other mode approved by RBI for meeting the tier-I capital requirements, Jammu and Kashmir Bank said in a regulatory filing.
In addition, it said, the shareholders also approved plan to issue unsecured, redeemable, subordinated, non-convertible Basel III compliant tier-2 bonds in the nature of debentures for inclusion in tier-2 capital of the bank, aggregating up to Rs 1,000 crore.
The implementation of Basel III guidelines has necessitated the need for banks in India to augment their capital base.
The fund raising 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 had said in its annual report.
In the light of the economic and business environment in India besides the downward pressures in the financial sector, increase in non-performing assets (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 had said.
Based on these factors in the capital planning exercise carried out, the bank needs to augment its capital base in phases up to March 31, 2021, it had said.