 "BOI raises Rs 2,000 cr in capital via Tier II bonds to fuel business growth")
Bank of India has raised Rs 2,000 crore in capital via Basel III-compliant Tier-II bonds to comply with regulatory norms and fuel business growth. The bonds, issued with a coupon rate of 7.88 per cent, were offered through the National Stock Exchange's Electronic Bidding Provider Platform. The bank received 83 bids totalling Rs 3,770 crore, of which 48 were successful, aggregating to Rs 2,000 crore, according to a statement from the bank. These Tier-II bonds, which have a 'AA+' rating from CRISIL, have a 10-year maturity period.
The bank clarified that the capital was raised to augment its overall financial resources in line with Reserve Bank of India guidelines. The proceeds will be utilised for general business activities rather than any specific project.
As of June 30, 2023, the bank's Tier 1 capital ratio stood at 13.8 per cent, and the overall capital adequacy ratio was 15.6 per cent, as stated by the rating agency. The Tier-II capital infusion is expected to increase the capital adequacy ratio by about 50 basis points, a bank executive noted.
In April 2023, the bank's board approved a plan to raise up to Rs 6,500 crore during the financial year FY24. The sum includes up to Rs 4,500 crore from equity offerings and additional Tier-I bonds, with the remaining Rs 2,000 crore coming from Tier-II bonds. With the recent bond issue, the bank has completed its Tier-II capital raising plans.
The next focus will be on raising capital through equity offerings to reduce government holdings, subject to market conditions in the second half of FY24. As of June 30, 2023, the Government of India held an 81.41 per cent stake in the bank.