Bank of India also takes the QIP path to raise funds

In a move towards increasing credit to the MSMEs and the agricultural sector, the state owned bank - Bank of India (BOI) is planning to raise Rs. 1500 to Rs. 2000 crore through Qualified Institutional Payment (QIP) by the end of this fiscal year.  

Major public and private sector banks have started planning to raise funds that would help them to restore their market share which had been affected by the non-banking finance companies (NBFCs). But now that the NBFCs are facing credit crisis, with many small banks posting rise in bad loans, it is the right chance for any healthier bank to accumulate growth capital.

 Three public sector banks and two private sector banks are mulling ways to raise aggregate of up to Rs. 62,000 crore this year. This list includes the names like State Bank of India, Bank of Baroda, Canara Bank, Axis Bank and RBL Bank.

The banking sector is facing several headwinds amid liquidity crunch along with rise in Non Performing Assets (NPAs) in the economy. There are very few banks who have posted better asset quality. One among them is Bank of India.

For BOI, the NPAs have narrowed out as the bank posted its gross NPAs at 16.50 per cent of the gross advances in Q1FY20, down from 16.66 per cent in Q1FY19. Net NPAs or bad loans have declined substantially to 5.79 per cent as against 8.45 per cent. Moreover, the bank is also not expecting any fresh slippages.

The bank has also informed that it is expecting to recover around Rs. 2,500 crore with the resolution of about eight to ten big NPA cases in the National Company Law Tribunal (NCLT). However, it is to be seen how the bank reduces its higher provisions going forward.

On Monday, the stock of Bank of India opened at Rs. 70.40 per share and made an intraday high and low of Rs. 70.40 and Rs. 68.55, respectively on the BSE. At 14:22 hours, the stock was trading nearly at Rs. 69.40 on the BSE.