India's public sector banks are planning to raise $3 billion from the market in the ongoing financial year, which ends in March 2021, a source in the Indian Ministry of Finance has told Sputnik.
One major public sector bank, the Punjab National Bank (PNB), is likely to raise funds next week. Public sector banks have already raised $5.47 billion directly from markets through equity sales this year.
The fundraising is essentially aimed at boosting the capital base of banks amid disruptions caused by the COVID-19 pandemic.
The source revealed that PNB is likely to raise funds in the coming week as part of its plan to raise $1.5 billion in the current financial year.
Apart from other public sector banks such as the Bank of Baroda and Canara Bank, the nation's largest lender, the State Bank of India, has received approval from its shareholders to raise funds.
Private banks in the country have already raised funds upwards of $7.2 billion to bolster their capital requirements amid the devaluation in asset quality due to the COVID-19 pandemic.
Private financial institutions like Yes Bank, Kotak Mahindra, ICICI Bank, IndusInd Bank, and IDFC First were among the first to raise funds from the market in the form of preferential issue or qualified institutional placement almost four months ago to insulate their balance sheet from COVID-19-induced defaults.