Bank of India Clears ₹200 Billion Infrastructure Bond Issue to Fuel Long-Term Lending

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