According to its latest plan, Dhanlaxmi Bank will raise capital through the flotation of 8.5 million shares amounting to raise Rs 200 crore with the issue. This though would result in a dilution of the 9% shareholdings for the lending institution.

A banker, who spoke on condition of anonymity said, "There is a demand in the market and we are exploring both existing as well as new PE participation." The issuance is purely equity based and the board has allotted 8.5 million equity shares of Rs 10 per share plus a premium of Rs50 resulting in Rs51 crore in preferential allotment with a cap of Rs 200 crore.

The equity fund would test the confidence of the market on the bank's capability and future, as the bank is viewed as a weak bank for acquisition under the new banking license regulations. The bank has a CAR of 10.7%, amongst the lowest Tier 1 capital in the private lending market.