Indian Overseas Bank gets nod to raise Rs 10,000 crore through infra bonds
The fundraising would depend on financing needs as well as refinancing of infrastructure and reasonably priced homes, the bank stated in a Wednesday regulatory release.
State-owned Indian Overseas Bank has been given the board’s approval to raise Rs.10,000 crore through the issuance of long-term infrastructure bonds.
The bank is authorised to raise money in one or more tranches either in the current or next financial year. The fundraising would depend on financing needs as well as refinancing of infrastructure and reasonably priced homes, the bank stated in a Wednesday regulatory release.
Through long-term infrastructure bonds, Bank of Maharashtra and Punjab National Bank lately raised Rs 1,612 crore and Rs 2,950 crore respectively in February.
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Reserve Bank of India rules state that banks may use money obtained from long-term infrastructure bonds solely for affordable housing and lending to infrastructure and its related sectors.
These bonds have to be at least seven years matured. Unlike deposits, funds raised through long-term bonds are exempt for regulatory reserve requirements including cash reserve ratio and statutory liquidity ratio, so making them a less expensive source of money for banks, analysts added.
Shares of the Indian Overseas Bank are trading low by 1.30% at Rs 43.26.
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