IDBI issue gets Sebi approval

Mumbai, Feb. 23: State-owned IDBI Bank has received a green signal from market regulator Sebi to raise up to Rs 3,771 crore through a qualified institutional placement issue.

The Centre has given its approval to the issue, which will dilute its holding in the lender. At present, the government's stake in the bank is 80.16 per cent.

Sebi's approval comes after the bank's board gave a go-ahead for a preferential issue of capital to the Life Insurance Corporation aggregating up to Rs 1,500 crore. This is subject to the Centre's approval. The bank also plans to raise $500 million via bonds in offshore markets to enhance its tier-I (core) capital.

Meanwhile, credit rating agency Icra has downgraded the lender's various bond borrowing programmes by a notch.

Icra said the rating revisions were on account of a higher-than-anticipated stress, slower-than-expected pace of recovery and a weak outlook for several credit-intensive sectors, which have led to a sharp deterioration in the bank's asset quality indicators.

It forecast that the bank's earnings profile is likely to remain weak over the medium term on account of a relatively high share of stressed assets (10.2 per cent restructured advances as a proportion of outstanding net advances).

Other PSU lenders are also raising capital such as the SBI, which garnered Rs 3,000 crore via bonds to fund growth.

Securities and Exchange Board of India ( SEBI )