Housing Development Finance Corporation (HDFC) plans to raise $1.8 billion through the sale of shares or bonds, as financiers across India seek to boost buffers amid coronavirus.
The money will be used for purposes including organic growth, acquisitions and to maintain sufficient liquidity, India’s biggest mortgage lender said in a statement.
HDFC becomes the latest to join other lenders including Yes Bank, IndusInd, looking to tap capital markets to bolster their balance sheets from any sharp spike in bad loans from a virus-caused contraction for the first time in four decades.
Last month, Kotak Mahindra Bank raised close to $1 billion via the sale of shares to bolster capital buffers further.
HDFC is one of the top housing finance lenders with a capital adequacy ratio of 17.6% and has been able to skirt a festering shadow banking crisis that has weakened most of India’s financial sector.
Raising capital is crucial for Indian lenders already struggling with the highest bad loan ratio among major economies. A Credit Suisse report from last month estimates Indian lenders need to raise $20 billion of capital, of which state banks will require $13 billion.