Page 45 - Banking Finance September 2023

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c) Composite Issue: These types of issues are combination
of public issue and Right issue. The allotment of shares
in both public issue and rights issue is proposed to be
made simultaneously, it is called composite issue.
Bonus Issue: When an issuer makes an issue of shares
to its existing shareholders without any consideration
based on the number of shares already held by them as
on a record date it us called bonus issue.
d) Private Placement: When an issuer makes an issue of
shares or convertible securities to a select group of
persons not exceeding 49, and which is neither a rights
issue nor a public issue, it is called a private placement.
Reserve Bank has specified the minimum CRAR of 11%
Private placement of shares or convertible securities can
(including the counter cyclic buffer). Banks are
be of three types:
maintaining CRAR level above the mandatory
(i) Preferential allotment: When a listed issuer shares
requirement set by the reserve bank.
or convertible securities to a select group of persons
HDFC Bank is having CRAR of 18.93%, highest among
in terms of provisions of Chapter VII of Sebi (ICDR)
the selected banks at the end of June 2023 quarter.
Regulations, 2009, it is called a preferential
allotment. Among the selected public sector banks, Canara Bank
is having highest CRAR of 16.24% at end of June 2023.
(ii) Qualified Institutions Placement (QIP): When a
listed issuer issues equity shares or non-convertible
debt instruments along with warrants and Conclusion
convertible securities other than warrants to Banks, in addition to meeting the business needs, also
Qualified Institutions Buyers only, in terms of comply with the regulatory guidelines issued by the reserve
provisions of Chapter VIII of SEBI (ICDR) Bank. To meet with the scarcity of capital, hampering the
Regulations, 2009, it is called a QIP. growth of business. Banks start forecasting of the capital
(iii) Institutional Placement Programme (IPP): When followed by strategy formulation to raise the capital based
a listed issuer makes further public offer of equity on the future needs.
share or offer for sale of shares by promoter/
promoter group of listed issuers in which the offer We may conclude that Banks in India are well capitalized to
of shares is made only to Qualified institutional meet with any unexpected losses in the business and
buyers for the purpose of achieving minimum public planning the need of capital through tools like stress testing
shareholding, it is called IPP. etc.

CRAR of Big Eight Banks in India

Bank SBI PNB BOB CANARA UBI HDFC AXIS ICICI
CRAR (June 2022) 13.43 14.82 15.46 14.91 14.42 18.10 17.83 17.47
CRAR (June 2023) 14.56 15.54 15.84 16.24 15.95 18.93 17.74 16.71

BANKING FINANCE | SEPTEMBER | 2023 | 45