AU Small Finance Bank has got shareholder approval to raise up to Rs 14,500 crore in equity and loan capital to finance its commercial expansion.
The bank’s shareholders approved the fund-raising plans at its Annual general meeting (AGM) on August 17, 2021, according to a regulatory filing on Wednesday.
During the AGM, which was presided over by Raj Vikash Verma, the bank’s part-time Chairman and Independent Director, AU SFB highlighted important business figures, branch development, the current economic condition, and difficulties. “The Chairman further announced that discussion on all the agenda items have been completed successfully,” the bank stated. It said in the filing that the AGM proceedings will be summarized.
AU Small Finance Bank stated in its annual report 2020-21 that it will seek shareholder permission to raise a sum not exceeding Rs 12,000 crore by selling debt instruments. The debt instruments might be offered in one or more tranches in the domestic and/or international markets, according to the company.
It also recommended raising Rs 2,500 crore in equity capital and seeking shareholder approval at the AGM.
As a matter of prudence, we seek an enabling resolution to raise additional equity capital up to Rs 2,500 crore in order to always be in compliance with different regulatory requirements in the event of any unanticipated contingency and to ensure that there is adequate cash to sustain expansion.
The lender stated that it would require capital to sustain expansion if macroeconomic conditions improved.
In order to satisfy rising regulatory requirements, the bank must stay well-capitalized, with a solid tier 1 capital base, according to AU SFB’s annual report for FY21.
As of June 30, 2021, the bank’s capital to risk-weighted asset ratio (CRAR) was 23.1%, far over the legal regulatory minimum requirement. The RBI regulation requirement for CRAR is 15%. The tier-I ratio was 21.6 percent.
AU Small Finance Bank (SFB) reported a 15% increase in net profit to Rs 203 crore in the first quarter of the current fiscal year, which ended in June.
The lender has just launched its credit card, making it the first and only SFB to provide credit cards to its customers.
AU Bank’s stock finished at Rs 1,341.45 a share on the BSE, down 0.69 percent from its previous closing.