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Bank of India intends to use infrastructure bonds to generate up to Rs 5,000 crore

Submitted by admin on July 5th, 2024

Days after the State Bank of India (SBI) issued its infrastructure notes, public sector lender Bank of India (BOI) intends to raise up to Rs 5,000 crore through infrastructure bonds.

According to BOI authorities, the proposed infra bond issue has been rated “AA+” by rating firm India Ratings. Later this week, the capital raising committee will get together to finalize the fundraising strategy. The state of the market would determine the precise sums raised and when.

The state-run lender looked into infra bonds because of SBI’s higher fundraising rates as well as the rising need for funding from renewable energy companies and affordable housing, according to BOI officials.

By the end of March 2024, BOI’s infrastructure loan book was valued at Rs 58,860 crore.
Through 15-year infrastructure bonds with a 7.36% rate, SBI had raised Rs 10,000 crore.
Regulations pertaining to reserve requirements, such as the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR), do not apply to funds generated through infrastructure bonds.
You can use the whole amount for lending activities. Banks are required to retain 4.5% of the funds they collect via deposits with the Reserve Bank of India as CRR. To keep SLR, they must also invest around 18% of their income in equities.

According to CRISIL Ratings, investments in India’s main infrastructure sectors—renewable energy, highways, and real estate—are expected to increase by 38% to Rs 15 trillion in the fiscal years 2025 and 2026 as compared to the preceding two fiscal years.