HDFC Bank will hit the US market with a $300m (Rs 1,370 crore) offering of American Depository Shares (ADS) this fiscal. The issuance will dilute parent Housing Development Finance Corporation's holding in the bank to 20.8%, from 24.06%.

"We would not want HDFC's stake in the bank to go below 20%," Deepak Parekh, chairman, HDFC, said.

This is the second ADS issue by the private bank. HDFC Bank had entered the US market in July '01 to raise $172.5m (Rs 780 crore). The bank board, at its meeting on Thursday, approved a proposal to raise additional share capital not exceeding $300m through an ADS.

HDFC Bank's capital adequacy ratio as of September 30 was at 10.9% - down from 11.7% on March 31. The capital adequacy ratio of the bank after the issue is likely stand at 13-14%. The retail advances of the bank for the second quarter ended September 30 stood at 42.8%, against 37.5% in the corresponding period
of the previous fiscal.

The money raised through the proposed ADS issue, together with mobilisations from Tier II bonds and profit accretion, will fund the bank's growth for the next three years.

In the first half of this fiscal, the bank has added 67 branches, with 49 branches in the second quarter alone. The bank is currently growing at a rate of around 30% and has a balance sheet size of around Rs 43,072 crore. The bank scrip at the Bombay Stock Exchange fell 1.62% to Rs 404.2 on Thursday. In the next few weeks, the bank will have to convene an EGM to get the shareholder's approval for the ADS issue.