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Bank of India has announced plans to raise INR 20,000 crore during the ongoing financial year through long-term infrastructure bonds, marking a strategic move to support infrastructure financing. The bank's board approved this initiative, aligning with a broader trend among major banks, including SBI, to prioritise infra bonds over traditional AT-1 and Tier-2 instruments. These bonds offer regulatory exemptions from CRR and SLR, making them an attractive financing tool. Their full deployability for lending adds to their appeal in the current economic climate.
State-owned Bank of India (BoI) recently announced its intention to raise INR 20,000 crore in the current financial year by issuing long-term infrastructure bonds. This move is part of the bank's strategy to bolster funding support for infrastructure-focused projects. Advertisement
In a regulatory filing, BoI confirmed that its board had approved the issuance of infra bonds amounting to INR 20,000 crore for the 2025-26 financial year. The initiative places the bank among a growing list of public sector lenders, including the State Bank of India, that are increasingly turning to infrastructure bonds to mobilise project-specific funding.
Infrastructure bonds hold an edge over other capital-raising instruments such as Additional Tier-1 (AT-1) and Tier-2 bonds. They are preferred due to favourable pricing and regulatory incentives. Notably, these bonds are exempt from mandatory reserve requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), allowing banks to fully utilise the proceeds for direct lending.
This development signals a continued preference for infrastructure bonds as banks look for efficient, cost-effective instruments to fuel India's infrastructure growth, a trend that has intensified in recent years as the government pushes large-scale development projects.
Source - PTI
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