 "BoI to tap retail investors for tier-I capital bonds")
Bank of India plans to tap retail investors for issuance of additional tier-I bonds (AT1) to strengthen capital adequacy ratio.
M Rego, managing director and chief executive, said his bank would look at this route (AT1) to raise capital. AT1 are Basel-III compliant instruments that come with restrictions on payments of interest and principal to absorb losses.
The bank had raised Rs 1,500 crore in capital by issuing AT1 bonds to institutional investors, Rego told reporters on the sidelines of annual banking summit Fibac here on Wednesday.
The Securities and Exchange Board of India (Sebi) has rules for issuing AT1 bonds to the retail segment. The market regulator had prescribed minimum Rs 2 lakh investment so only informed investors would enter the niche segment.
Bank of India had raised Rs 540 crore through monetisation of its non-core assets in 2016-17 and was planning to raise a similar amount. In June, the bank had raised Rs 540 crore by selling 18 per cent stake in the life insurance joint venture with Dai-ichi and Union Bank of India to the Japanese firm.
The bank is looking at divestment of investments in associates and monetisation of non-core assets.
The total quantum targeted is about Rs 1,000 crore for 2016-17.
The government had last month released Rs 22,915 crore of its budgeted Rs 25,000 crore of recapitalisation into 13 public sector banks. Of this, Bank of India got Rs 1,784 crore.
M Rego, managing director and chief executive, said his bank would look at this route (AT1) to raise capital. AT1 are Basel-III compliant instruments that come with restrictions on payments of interest and principal to absorb losses.
The bank had raised Rs 1,500 crore in capital by issuing AT1 bonds to institutional investors, Rego told reporters on the sidelines of annual banking summit Fibac here on Wednesday.
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BoI chief said investors need to understand the complexities and risks of such products. There is a risk that the issuing bank might stop paying coupon (interest) or investors might lose the principal amount in a situation like absorption of losses and liquidation of entity.
The Securities and Exchange Board of India (Sebi) has rules for issuing AT1 bonds to the retail segment. The market regulator had prescribed minimum Rs 2 lakh investment so only informed investors would enter the niche segment.
Bank of India had raised Rs 540 crore through monetisation of its non-core assets in 2016-17 and was planning to raise a similar amount. In June, the bank had raised Rs 540 crore by selling 18 per cent stake in the life insurance joint venture with Dai-ichi and Union Bank of India to the Japanese firm.
The bank is looking at divestment of investments in associates and monetisation of non-core assets.
The total quantum targeted is about Rs 1,000 crore for 2016-17.
The government had last month released Rs 22,915 crore of its budgeted Rs 25,000 crore of recapitalisation into 13 public sector banks. Of this, Bank of India got Rs 1,784 crore.