Sidbi to raise Rs 10,000 crore from rights issue next fiscal
Small Industries Development Bank of India (Sidbi), which refinances SME loans, plans to float a Rs 10,000-crore rights issue next fiscal to expand its equity capital as it expects to grow assets to Rs 5 lakh crore by March 2024 from about Rs 4 lakh crore in March 2023, a top official has said.
The central government owns 20.8 per cent in Sidbi, while State Bank of India holds 15.65 per cent and Life Insurance Corporation 13.33 per cent. The rest of the equity is held by other public financial institutions and banks.
The shareholders will subscribe to the proposed rights issue.
The lender's loan growth optimism comes from the demand for direct financing that is growing by leaps and bounds, which two years ago was only 7 per cent of its book but is now 14 per cent.
Sivasubramanian Ramann, chairman and managing director, said the proposed rights issue will be carried out in two tranches of Rs 5,000 crore each next fiscal to expand its capital base by Rs 10,000 crore and support the growing balance sheet, which is expected to rise by a quarter from the present. «We recently had 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 Rs 10,000 crore to us next fiscal so to provide us with more lending support to SMEs,» Ramann said here over the weekend.
Sidbi's capital adequacy ratio (CAR) came down to 19.29 per cent in FY23 from 24.28 per cent in FY22, according to the annual report which explained the fall to the effective capital utilisation to increase the portfolio of the bank. This again fell to 15.63 per cent as of the June 2023 quarter.
However, according to rating agency Icra, this capitalisation level
