MUMBAI: The negative sentiment in the stock market has forced South-based Dhanalakshmi Bank to extend the closing date of its rights issue by a month. The issue saw poor response, with shares trading slightly below the rights issue price which is fixed at Rs 62.
According to sources, senior bank officials approached the Reserve Bank of India (RBI), seeking an extension of the deadline for the issue.
It opened on February 19 and was slated to close on March 19, which is now being extended to April 17. Sources added that only 3% of the retail investors have subscribed to the issue, so far. The bank is raising money to boost its capital adequacy ratio (CAR) which stands at 9.77%. But with the deadline of the rights issue being extended to the next fiscal, the bank may face problems in meeting the 9% CAR.
Bank’s shares have been trading in the Rs 60-65 band since end-February. They slipped below the issue price on Thursday.
However, the shares recovered to Rs 62 on Friday. The bank plans to raise Rs 198.7 crore through the rights issue by offering one share for every one share held.
If the bank failed to attract retail investors to subscribing to the issue, P Raja Mohan’s stake in the bank will again surpass the stipulated 10% level. Recently, P Raja Mohan lowered his holding in the bank to 9.68% from 37%, following pressure from RBI.
Regulator’s rules stipulate that no single individual can hold more than 10% in a bank. Sources said the central bank has refrained from issuing fresh branch licence to the bank till it meets some parameters, including shoring up its capital and lowering Mr Mohan’s stake.
According to sources, senior bank officials approached the Reserve Bank of India (RBI), seeking an extension of the deadline for the issue.
It opened on February 19 and was slated to close on March 19, which is now being extended to April 17. Sources added that only 3% of the retail investors have subscribed to the issue, so far. The bank is raising money to boost its capital adequacy ratio (CAR) which stands at 9.77%. But with the deadline of the rights issue being extended to the next fiscal, the bank may face problems in meeting the 9% CAR.
Bank’s shares have been trading in the Rs 60-65 band since end-February. They slipped below the issue price on Thursday.
However, the shares recovered to Rs 62 on Friday. The bank plans to raise Rs 198.7 crore through the rights issue by offering one share for every one share held.
If the bank failed to attract retail investors to subscribing to the issue, P Raja Mohan’s stake in the bank will again surpass the stipulated 10% level. Recently, P Raja Mohan lowered his holding in the bank to 9.68% from 37%, following pressure from RBI.
Regulator’s rules stipulate that no single individual can hold more than 10% in a bank. Sources said the central bank has refrained from issuing fresh branch licence to the bank till it meets some parameters, including shoring up its capital and lowering Mr Mohan’s stake.
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