- By Vaamanaa Sethi
- Mon, 18 Sep 2023 02:43 PM (IST)
- Source:JND
Small Industries Development Bank of India (Sidbi) is eyeing to raise Rs 10,000 crore via rights issue next fiscal year, Sidbi chairman and managing director Sivasubramanian Ramann, was quoted as saying by PTI.
Ramann further added that the motive behind the fundraise is to expand its equity capital as it expects to grow assets to ₹5 lakh crore by March 2024 from about ₹4 lakh crore in March 2023.
The Sidbi chairman also said that the forthcoming rights issue will occur in two installments of ₹5,000 crore each during the next fiscal year. This move aims to bolster the capital base by ₹10,000 crore and provide essential support to accommodate the anticipated 25% expansion of the current balance sheet.
"We recently moved the department of financial services seeking to raise capital. Following this they moved the standing committee of Parliament which has suggested a capital support of ₹10,000 crore to us next fiscal so as to provide us with more lending support to SMEs," Ramann said.
Regarding the increasing level of direct lending, the Chairman of Sidbi mentioned that the company's current direct lending share stands at a mere 14%. However, the company anticipates this share to increase to 25% in the next three years.
"My objective is to take this to a quarter (25%) of the total book over the next three years,” said Ramann. The share of the company's refinancing is still about 86%.
The capital adequacy ratio (CAR) of Sidbi dropped from 24.28% in FY22 to 19.29% in FY23, as detailed in the annual report. This decrease was attributed to the bank's strategy of increasing its portfolio through effective capital utilization. Subsequently, in the June 2023 quarter, the CAR further declined to 15.63%.
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The company’s asset base grew 63% from ₹2,47,379 crore in FY22 to ₹4,02,383 crore in FY23, while its income rose a full 102% in the year to ₹18,485 crore, from which it booked a net income of ₹3,344 crore, which was 71% more than the year-ago number.
The central government owns 20.8% in Sidbi, while the SBI holds 15.65% and the LIC 13.33%. The rest of the equity is held by other public financial institutions and banks. The shareholders will subscribe to the proposed rights issue.