Mumbai: Bank of Baroda may raise up to ₹10,000 crore through the issuance of infrastructure bonds as the state-owned lender looks to garner long-term capital amid firm demand for credit.
Last week, the bank informed exchanges that it has scheduled a board meeting on October 11, to discuss amongst other matters, the approval of fund-raising through the issuance of long-term bonds for financing of infrastructure and affordable housing.
“They (Bank of Baroda) have been making market inquiries about an infrastructure bond worth up to ₹10,000 crore as well as a tier-1 bond for up to ₹2,000 crore,” a source aware of the development said.
Infrastructure bonds are long-term debt instruments with a maturity of at least seven years. Given that these instruments are used for providing finance to the infrastructure sector, banks do not have to maintain cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on them, according to Reserve Bank of India norms.
Over the past few weeks, several banks, including State Bank of India, Canara Bank and ICICI Bank have opted for the infrastructure bond route as a method to raise long-term funds.
As of September 22, bank credit growth was at 20% year-on-year while deposit growth was at 13.2% over the same period, latest RBI data showed.
POWER GRID BONDS
Power Grid Corporation of India aims to raise up to ₹2,250 crore worth of funds through a sale of unsecured, non-convertible debentures later this week, sources said.
The firm’s bond issue is likely to have a base size of ₹500 crore and a greenshoe option worth ₹1,750 crore. The bonds are of 10-year maturity and bidding for the sale is likely to take place on October 11.
