Low feat by banking stocks forces banks to delay qualified institutional placement (QIP) plans

MUMBAI: Weak performance of the banking stocks is forcing public sector lenders to defer their plans to raise money through qualified institutional placement (QIP) route to the next fiscal.

"Market conditions are not good. It appears difficult in this financial year," Dena Bank executive director RK Takker told PTI when asked whether banks can successfully raise funds from the market.

The state-run lender has scope to raise around Rs 570 crore through QIP. Another public sector lender, Union Bank has also not taken a call on its plan to raise money through QIP issue. When contacted Union Bank chief financial officer Mayank Mehta said: "We have still not decided on the time when we will be doing it."

The bank has received approval from its board to raise Rs 1,400 crore through QIP. The bank has an option to raise money through the instrument till December 2014. Analysts say that with only few days left in this fiscal, ending March 31, jittery market conditions and the Lok Sabha elections - to be held from April 7 to May 12, it is most likely that banks will plan their QIPs post elections.

"Market is not in a good shape. The banks may wait for some more time and can come in April or May, or post-election also," said a banking analyst.

An investment banker said: "There is no appetite for bank papers. You have seen what has happened to the SBI issue. I don't think you are going to see anything in March." In January year, SBI had raised Rs 8,032 crore through the QIP route, making it the biggest-ever equity sale via this route.

But the issue was nearly bailed out by LIC and other public lenders and the share was sold at the lowest end of the band at Rs 1,565 apiece. SBI was planning to raise Rs 9,400 crore.