Image Source : ET Infra
Bank of India has approved a major capital-raising plan through the issuance of infrastructure bonds worth up to ₹200 billion. The move is aimed at supporting long-term lending for core sectors such as roads, power, and railways, while strengthening the bank’s balance sheet amid India's infrastructure push.
Board Approval And Funding Plan
* The Board of Directors of Bank of India has given approval for raising up to ₹200 billion (₹20,000 crore) via infrastructure bonds
* These will be long-term bonds with tenures likely ranging from 7 to 15 years, in line with RBI guidelines
* The issuance will be done in one or more tranches, depending on market conditions and capital requirements
* The raised funds will qualify as Tier II capital under Basel III norms and aid in balance sheet optimization
Purpose Of Bond Issue
* The proceeds will be exclusively used for financing long-gestation infrastructure and affordable housing projects
* Eligible sectors include roads, highways, renewable energy, ports, power transmission, railways, and low-cost urban housing
* The bank aims to align its funding profile with the asset tenure of infrastructure loans, reducing asset-liability mismatches
* This also supports India’s infrastructure growth strategy under the National Infrastructure Pipeline and PM Gati Shakti initiatives
Strategic Importance And Economic Context
* With increasing credit demand from infrastructure sectors, the move will enhance Bank of India’s ability to provide long-term loans
* The initiative aligns with government and regulatory thrust on banks participating in large-scale capital expenditure financing
* Infrastructure bonds offer exemption from reserve requirements like CRR and SLR, making them cost-effective for lenders
* The bond market environment is currently favourable due to stable interest rates and investor appetite for AAA-rated instruments
Impact On Capital Adequacy And Market Perception
* The bond issue is expected to augment Bank of India’s capital adequacy ratio without diluting equity
* It will improve the bank’s capacity to expand its lending book without stressing short-term liabilities
* Rating agencies may view the step positively, as it indicates a proactive approach to capital planning
* The move signals a broader trend of public sector banks tapping the debt market to support India’s infrastructure ambitions
About Bank of India
Bank of India is a leading public sector bank with a strong domestic and international presence. Founded in 1906, it plays a key role in retail, corporate, and priority sector lending, with a renewed focus on infrastructure, digital banking, and sustainable growth.
Sources: BSE Filing, Moneycontrol, Business Standard, Economic Times, Bloomberg, Financial Express
Advertisement
Advertisement
