A proposal by Andhra Bank to raise up to ₹3,256 crore equity capital by way of preferential allotment to the Government of India was passed with requisite majority by an Extraordinary General Meeting (EGM) on Friday.
The meeting followed the government’s decision to infuse the capital, which the bank would utilise for shoring up of common equity and Tier-I capital. The issue price, including premium, for the preferential allotment has been fixed at ₹28.42 per share.
Post the allotment, the government’s holding would increase from 84.83% to 90.85% in the bank.
In its explanatory statement for the EGM resolution, Andhra Bank had cited the need to raise capital to support the envisaged business for fiscal year 2020 and to ensure compliance with applicable capital norms under the Basel III regime.
It had also cited the higher provisioning requirements on account of references of large-ticket accounts classified as non-performing assets to the National Company Law Tribunal for resolution under the Insolvency and Bankruptcy Code, along with migration and fresh slippages.
The bank also informed the stock exchange that the Employee Stock Purchase Scheme-2018, which closed on March 20, was subscribed 109%. The bank attributed this to “good participation from the employees.” The issue price was ₹19.26 apiece.
On Friday, Andhra Bank shares closed at ₹25.85, down 1.15%.