Despite the new financial year marching ahead, most of the banks are showing a slow trend in raising capital. These banks are slow in this regard as most of them have already raised funds this year and the increasing yield in bonds has made the idea of selling them as completely unfavorable, a merchant banker said.

Generally, end March is the time when banks flood the market with bond issuances as they prepare themselves for a probable rise in demand for loans from consumers and industry.

Some banks like Bank of India, Axis Bank, and Bank of Baroda were expected to sell their bonds recently, but they have also backed their steps in this regard. However, merchant bankers said that IDBI Bank and UCO Bank did sell their bonds in the local market in the past few days.

Fund raising is done by banks to increase the capital in their balance sheet. Capital declines as banks lend money to borrowers. Fund raising is done mostly by selling bonds called Tier II issuances. Tier-I capital comprises of selling fresh shares (equity) and perpetual bonds, which are like quasi-equity offerings.

"Most banks have already fulfilled their capital requirements by raising funds in the December-January period," said Ajay Manglunia, head of the corporate desk at Edelweiss Securities, a debt brokerage firm. "Hardening of rates recently has also led banks to go slow on their capital-boosting activities," he added.

"The outlook on credit demand remains dismal, especially since April to October is traditionally a period where companies do not take long-duration loans," said Ashish Nigam, head of fixed income at Religare Asset Management. "If base rates come into effect, and then demand for loans is going to take a further hit because lending rates would go up," he added.

RBI has directed that the minimum capital adequacy ratio that needs to be maintained by commercial banks is 9% with up to 50% of it being Tier II capital. Bankers say that most banks have already capitalized above the limit.

This is why they are deferring any more fund raising regime. The central bank will release a tentative borrowing calendar for the April-September period at the end of the month.