SBI and Canara Bank announces fundraising; stocks close down

The public sector banks, such as State Bank of India (SBI) and Canara Bank on Friday, announced their plans for fundraising, which will be executed in the near future.

Fundraising activity from these banks can be attributed to the fact that economic activity is coming to its right path.

The board of Canara Bank approved fundraising of Rs 5,000 crore, in various ways, such as qualified institutional placement (QIP), rights issue, preferential allotment, etc. during FY21. In addition to this, it also will raise capital via additional tier-I Basel III compliant bonds worth Rs 3,000 crore during this period.

SBI, on the other hand, has its board meeting scheduled on July 15, in which, it will seek approval for fundraising of Rs 2,000 crore through preferential allotment or other options such as QIP, follow-on public offer (FPO), rights issue and Rs 1,000 crore via Basel-III compliant tier-I and tier-II bonds.

Prudent fundraising enables the banks to maintain a comfortable capital position, that is, strong capital adequacy ratio (CAR). As per RBI norms, public sector banks guided to maintain a CAR of 12 per cent.

The shares of both, SBI and Canara Bank, closed down by 2 per cent and 4 per cent each on Friday.