Bank of India plans additional Rs 5,000 cr infrastructure bond issue

To conduct brand recall survey for image enhancement, explores idea to appoint brand ambassador

Public sector lender Bank of India (BoI) is looking to raise an additional Rs 5,000 crore through infrastructure bonds, against the backdrop of soft interest rate trends. In the last week of November, BOI had raised Rs 5,000 crore through a 10-year infrastructure bond issuance at a coupon rate of 7.41 per cent.

 

These bonds are particularly advantageous for banks as they are exempt from regulatory reserve requirements such as the statutory liquidity ratio (SLR) and cash reserve ratio (CRR).

 

In July, BOI had raised Rs 5,000 crore through a similar 10-year infrastructure bond offering at a slightly higher coupon rate of 7.54 per cent. In total, the Mumbai-based lender has raised Rs 10,000 crore in two tranches.

 

 

A BOI official said the appetite for infrastructure bonds is good. The plan for raising additional about Rs 5,000 crore is in the discussion stage. The bank may go to board for approval to raise additional amounts through infra bonds depending on liquidity conditions and pricing trends in the market, he added.

 

There was a robust investment demand from institutional investors for long-tenor bonds from government-owned banks, despite the tight liquidity condition in the banking system. Commercial banks’ infrastructure bond issuances in the financial year 2025 (FY25) are projected to exceed Rs one trillion, almost double the amount raised in FY24, bond dealers said.

 

State Bank of India, Bank of Baroda, Canara Bank, Bank of Maharashtra and Indian Bank have also raised sizable amounts through infra bonds in the current financial year.

 

Working for image makeover

 

Meanwhile, BOI has also begun groundwork for brand building exercise. It is on lookout for advisory or consultancy firms for assessment of brand recall and outdoor advertisement activities. It has floated a Request for Proposal (RFP) for this exercise. It would explore an idea about having a brand ambassador for the bank.

 

Another BOI executive said one of the board members suggested assessing the impact of a kind of publicity bank is doing and how do you measure the actual increase in the business or impact on the business positively.

 

The option is also open to explore feasibility for appointing brand ambassador\endorsers for enhancing image and brand positioning. It is a very preliminary idea at this point of time, the official said.

 

Two public sector banks, country’s largest lender State Bank of India and Bank of Baroda have already appointed cricket icons as ambassadors. Last year in October, SBI roped in MS Dhoni to strengthen connections especially with the younger population. This year in October, BoB signed Sachin Tendulkar as the Bank’s Global Brand Ambassador under the three-year deal.