IOB gets board approval to raise Rs 10,000 crore via infra bonds, ET BFSI
Indian Overseas Bank has received board approval to boost Rs.10,000 crore via issuance of long-term infrastructure bonds.
The financial institution has approval to boost funds in a number of tranches within the present or subsequent monetary 12 months. The fund increase will likely be based mostly on the requirement for financing in addition to refinancing of infrastructure and affordable housing, the financial institution stated in a regulatory submitting on Wednesday.
Within the present monetary 12 months, a slew of banks, particularly public sector banks, tapped the market to boost funds via infrastructure bonds to assist credit growth amid intense competitors to boost deposits.
Not too long ago in February, Bank of Maharashtra and Punjab National Bank raised Rs 1,612 crore and Rs 2,950 crore, respectively, via long-term infrastructure bonds.
In response to the Reserve Financial institution of India guidelines, banks can use funds raised via long-term infrastructure bonds just for lending to infrastructure and its sub sectors and for reasonably priced housing. The maturity of those bonds should be a minimum of seven years.
Lengthy-term bonds are a less expensive supply of funds for banks as a result of not like deposits, funds raised via these bonds are exempt for regulatory reserve necessities comparable to money reserve ratio and statutory liquidity ratio, consultants stated.
