Indian private sector lender Axis Bank is planning to raise INR350bn ($4.6bn) as it reported a loss stemming from additional loan provisions related to the Covid-19 crisis, the Bloomberg reported.
The lender made total loan provisions of INR77.3bn ($1.02bn) for the quarter ended 31 March 2020, a 185% jump from the year-ago quarter.
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The Covid-19 exposures alone accounted for as much as INR30bn ($396m) of the total loan provisions.
The said capital will be raised through the sale of bonds, including possibly foreign currency notes. The board members of the bank approved the fundraising.
On a briefing call, Axis Bank CEO Amitabh Chaudhry called the pandemic a headwind for the year started 1 April and said that provisions will grow materially.
The bank will make risk controls tougher before deciding on new loans, he stated.
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By GlobalDataBy seeking additional funds, Axis Bank follows in the footsteps of peers including Kotak Mahindra Bank.
Last week, Kotak Mahindra Bank announced its plans to issue as much as $1bn of new shares to boost its capital.
The initiatives come as Indian lenders prepare for a rare economic contraction in the country triggered by the pandemic.
The central government’s lockdown due to Covid-19 is affecting business activity while regulators urge the banks to freeze loan repayments for three months and provide additional provisions as needed.
