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HDFC Bank may raise capital to build buffer

About half a dozen investment banks have spoken with the lender about a fundraising plan. The bank is believed to have shown interest and preliminary discussions have taken place.
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29 Aug 2020 2 Mins Read 0 comment
RBI governor Shaktikanta Das has advised banks to raise capital as a buffer, which can cover an expected increase of bad loans amid the cornonavirus pandemic. BCCL
RBI governor Shaktikanta Das has advised banks to raise capital as a buffer, which can cover an expected increase of bad loans amid the cornonavirus pandemic.
Mumbai: HDFC Bank, the country’s largest lender by market cap, is considering raising capital to beef up the balance sheet and take advantage of the enthusiasm for Indian lenders among foreign institutional investors and private equity funds. About half a dozen investment banks have spoken with the lender about a fundraising plan. The bank is believed to have shown
lower at 0.36%. But Jagdishan admitted in an investor concall recently that bad loans could spike 100-200 bps after the end of the moratorium period on loans and the onset of the restructuring window. The fund-raising could provide ammunition for lending growth once the economy revives and provide a cushion for bad loans in case of an unexpected spike.
Mumbai: HDFC Bank, the country’s largest lender by market cap, is considering raising capital to beef up the balance sheet and take advantage of the enthusiasm for Indian lenders among foreign institutional investors and private equity funds. About half a dozen investment banks have spoken with the lender about a fundraising plan. The bank is believed to have shown lower at 0.36%. But Jagdishan admitted in an investor concall recently that bad loans could spike 100-200 bps after the end of the moratorium period on loans and the onset of the restructuring window. The fund-raising could provide ammunition for lending growth once the economy revives and provide a cushion for bad loans in case of an unexpected spike.

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