The board of Kotak Mahindra Bank on Friday approved a proposal to raise Rs 7,000 crore through the issue of non-convertible debentures (NCDs) on a private placement basis.

The funds will be raised through unsecured, redeemable, non-convertible debentures in one or more tranches/series. Money raised by the bank is likely to be used to propel its business growth.

Other lenders have also announced fundraising plans amid loan growth overtaking the pace of deposit accretion.

The latest data from the Reserve Bank of India (RBI) shows that while credit growth in the banking system stands at 15.4 per cent, it is 11.8 per cent in the case of deposits.

Recently the country’s largest lender, State Bank of India (SBI), announced that it will mobilise up to Rs 50,000 crore in this financial year in debt from both the domestic and overseas markets.

Its board had cleared a proposal to raise the funds through various instruments like long-term bonds, and additional Tier 1 and Tier II bonds.

The PSU bank’s loans grew nearly 16 per cent in the January-March quarter compared with a 9.19 per cent growth in deposits.

Earlier this week, HDFC had raised Rs 10,000 crore through the issue of non-convertible debentures (NCDs) on a private placement basis to shore up its resources.

These unsecured NCDs had a tenure of 10 years, and it came at a coupon rate of 7.75 per cent.

The fund raise was part of an approval given by the mortgage lender’s board in March this year to issue NCDs in tranches, aggregating Rs 57,000 crore.