MUMBAI: Indian banks will raise funds through bonds in the coming weeks to take advantage of the recent drop in yields and meet capital requirements as credit growth picks up, analysts said.
State-owned lenders such as Bank of India and Bank of Baroda are in talks with commercial bankers to raise funds through additional tier one perpetual bonds that meet Basel III standards, according to the arrangers.
Bank of India plans to raise up to 15 billion rupees ($183.67 million) in primary bonds and may enter the market by the end of November, a senior official said on Wednesday.
“A number of investors have shown interest and have therefore approached us to participate in our additional primary bond offering,” said the official, speaking on condition of anonymity because the matter has not been made public.
Union Bank of India has announced plans to raise up to 22 billion rupees through secondary bonds, while Jammu and Kashmir Bank is also in the early stages of raising 15 billion rupees through secondary bond issues, three commercial bankers familiar with the matter said.
Sameer Kaul, Managing Director and Chief Executive Officer, TrustPlutus Wealth India, said: “To meet rising credit demand, banks are raising additional capital in the form of bonds to grow their balance sheets.”
Separately, private lender Kotak Mahindra Bank has announced plans to raise Rs 1,500 crore through seven-year infrastructure bonds, commercial bankers said. State Bank of India, the country’s largest lender, is also considering raising up to 1,000 crore in infrastructure bonds, notifying bourses on Thursday.