IDBI chairman V.P. Shetty in Mumbai on Thursday. (PTI)

Mumbai, June 14: Major banks have drawn up plans to raise funds from domestic and foreign markets.

The Industrial Development Bank of India has initiated steps to raise $1.5 billion through an issue of medium term notes.

The HDFC Bank is understood to have appointed Merrill Lynch and UBS as merchant bankers to help raise about $700 million through an equity issue.

The State Bank of India and the UTI Bank are the others who are planning share floats.

V.P. Shetty, chairman and managing director of the IDBI, today said the bank would enter the market in the next three months.

Senior officials of the bank said the exercise could take up to a year.

The lead arrangers are HSBC and Barclays.

Shetty said the target for credit growth for this fiscal was 18-20 per cent. For deposits, the target was 25 per cent.

The HDFC Bank, which is likely to enter the market in July, is now working on the pre-offer formalities.

The bank had earlier said that it planned raise to about $1 billion (Rs 4,200 crore) in shares.

Over a quarter of this sum will be raised through a preferential issue to parent company the Housing Development Finance Corporation.

The funds are for expansion and meeting the capital adequacy requirements under Basel II which will take effect from April 2008.