After the reverse merger with ICICI, ICICI Bank is planning to come out with a Rs 4,000 crore bond issue in the next fiscal.
The bank will seek approval from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) for the purpose.
ICICI joint general manager Amitabh Chaturvedi said: "We are targeting to raise Rs 4,000 crore through the bond issues next fiscal. We will be coming out with only tax-saving infrastructure bonds as around 90 per cent of the money is garnered through these tax bonds. We are also looking at the option of issuing deep discount bonds with a maturity of 15 years and above. However, we are currently looking at the acceptance of these bonds by customers after the new CBDT (tax) changes that have come in."
ICICI Bank will have to take Sebi permission every time it hits the market. Currently ICICI can file an umbrella prospectus and issue the bonds in tranches across the year. ICICI is also likely to reduce the tranches of the bond issue from eight this year to around three to four in the next fiscal as it will have to file a fresh prospectus every time it enters the market.
There is a grey area on the marketing of these bonds through agents as the RBI does not allow sale of liability products through direct selling agents. However, as ICICI Bank will have to file a prospectus, it is covered under the Sebi guidelines on public issues and can therefore involve brokers and agents.
The bond issue is unlikely to eat into the deposit mobilisation of the bank. "The customer segment for both the instruments would be different. The bond issue would be targeted at tax payers where there would be less competition," said an analyst.
The tenure of these tax-saving bonds ranges from 3 years to six years and six months. These tax-savings bonds could be used by the bank to service long-term infrastructure projects. Though most banks have deposits with tenure of up to five years, banks mostly receive deposits of a maximum of three years. Also unlike bonds, deposits cannot be sold in the market and there is a prepayment charge in case the customers breaks the deposits.
