 "Bank of India")
Bank of India plans to raise Rs 5,000 crore through the issuance of 10-year infrastructure bonds this week, according to multiple sources familiar with the development. The issuance will consist of a base issue size of Rs 2,000 crore and an additional greenshoe option of Rs 3,000 crore.
The bank had previously raised Rs 5,000 crore through 10-year infrastructure bonds in July of this year at a coupon rate of 7.54 per cent.
State-owned banks have increasingly turned to the domestic capital market to raise funds via infrastructure bonds, driven by credit growth needs amid challenges in deposit mobilisation. Public sector banks, including State Bank of India (SBI), Bank of Baroda, Canara Bank, Bank of Maharashtra, Bank of India, and Indian Bank, have collectively raised substantial amounts through infrastructure bonds in the current financial year.
According to sources, banks have raised Rs 74,256 crore via infrastructure bond issuances so far this financial year.
Infrastructure bonds offer a significant advantage for banks, as the funds raised are exempt from regulatory reserve requirements such as statutory liquidity ratio (SLR) and cash reserve ratio (CRR).
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Unlike funds raised through deposits—where banks must maintain 4.5 per cent of the amount as CRR with the Reserve Bank of India (RBI) and invest approximately 18 per cent in government securities to meet SLR obligations—proceeds from infrastructure bonds can be fully deployed for lending activities.
Last week, SBI raised Rs 10,000 crore through 15-year infrastructure bonds at a coupon rate of 7.23 per cent, bringing the total amount raised via long-tenor papers to Rs 30,000 crore in the current financial year. Recent domestic capital market offerings have seen strong demand for longer-tenor papers.
Additionally, Bank of India plans to borrow Rs 2,500 crore in the next quarter through additional tier-I (AT-I) bonds to strengthen its capital base.
AT-I bonds, which are perpetual in nature, include provisions that could impact interest payments if certain capital or earnings thresholds are breached. In extreme cases, these bonds may be converted into equity, reflecting their higher associated risks.
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 "Reserve Bank of India, RBI")
