IndusInd Bank is planning to raise capital through an overseas issue. The issue is expected to hit the market in the second half of the current financial year.
"With Basel II on the anvil, the bank will have to raise fresh capital in the second half of the current financial year, preferably through an overseas listing," said Bhaskar Ghose, managing director of IndusInd Bank.
The implementation of Basel II will have a 80 basis points impact on the bank's capital adequacy ratio, he added.
One basis point is one hundredth of a percentage point. The bank's capital adequacy ratio as on December 2004 stood at 12.75 per cent.
Ghose refused to comment on the exact size of the issue but said, "We plan to raise over $50 million, as anything below that will make no economic sense."
The Basel II accord will come into force in 2007-08.
At present, the total foreign holding in IndusInd Bank stands at around 45.58 per cent.
Of late, new generation private sector banks such as HDFC Bank, UTI Bank and Centurion Bank raised fresh capital through overseas issues. ICICI Bank recently concluded a sponsored American depository shares.
"There is a huge appetite for Indian papers in the overseas market," said senior bank officials. "Foreign investors continue to bet on the India shining story and Indian banks are benefiting from this," he added.
K V Kamath, managing director and chief executive officer, ICICI Bank, had earlier ruled out any immediate plan to raise capital to adhere to Basel II norms.
UTI Bank, another new generation private sector bank, is planning to advance its capital raising plan on account of Basel II implementation, said a senior UTI Bank official. Basel II is expected to have a 100 basis point impact on the bank's capital adequacy ratio, he added.
Currently, the bank's capital adequacy ratio as on March 31, 2005, stood at 12.66 per cent.
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