RBL Bank Is Said to Plan $200 Million Preference Share Sale

(Bloomberg) — RBL Bank Ltd. plans to raise about 15 billion rupees ($200 million) through a preferential share offering, according to people familiar with the matter.

An announcement could come as soon as Thursday when the board meets to consider the allotment, said the people, who asked not to be identified before a final decision. The Indian private sector lender plans to use the proceeds to improve capital buffers and boost lending over the coming year once the pandemic eases, one of the people said.

Shares of RBL Bank rose as much as 2.5% on Thursday in Mumbai, outperforming a 0.6% drop in the benchmark Sensex index.

The bank joins financial peers from IDFC First Bank Ltd. to L&T Finance Holdings Ltd. in tapping the equity market to raise capital as the coronavirus outbreak threatens to push up defaults. The bad-loan ratio in India’s banking sector are forecast to rise to a two-decade high by March 2021.

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RBL’s core equity ratio, the key gauge for provisioning and lending potential, was at 15.16% end-June compared with a minimum regulatory requirement of 8%, filings show.

Deliberations of the preferential share offering are ongoing and the board could still decide not to proceed, the people said. A representative for the bank declined to comment.

(Adds shares performance in the third paragraph.)

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