IDFC First Bank Ltd. is considering a $200 million share sale to bolster its capital, sources familiar with the matter said, as the lockdown in India raises the risk of loan defaults.

The private-sector lender is waiting for the five-week lockdown to end before firming up the route for fundraising, the sources said, asking not to be identified because the information is private. The lender might consider a sale of new shares to institutional investors among other options, the sources said.

IDFC Bank, which got a banking permit in 2015, is joining peers including Kotak Mahindra Bank Ltd., Yes Bank Ltd., and IndusInd Bank Ltd. with plans to tap the capital market. The banks capital adequacy ratio was 13.3 per cent at the end of December, most of which was core equity.

No final decision has been taken on the share sale, and the timing ultimately depends on the impact of the coronavirus outbreak on the business, the people said. As well as bolstering its capital, the new share issue would position the bank for growth once the lockdown ends, one of the people said.

A representantive for IDFC First Bank declined to comment. In a regulatory filing on Tuesday, the bank said a capital raising via preferential allotment will be discussed at a board meeting on Friday.

Shares of the Warburg Pincus-backed lender have dropped more than 50 per cent this year and were trading at Rs 22 rupees apiece on the BSEi on Tuesday. The nine-stock Bankex Index has dropped 36% in 2020.

Related Topics