This issuance comes at a time when banks have been aggressively mobilising capital through debt markets this year as credit growth remains much higher than deposit growth. Banks and financial institutions raise money through infrastructure bonds to finance long-term infrastructure projects. Indian Bank plans to raise funds for refinancing purposes.
For banks, infrastructure bonds come with an advantage because funds raised through these securities are exempt from the regulatory requirement of maintaining Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
With bank credit growth persistently outstripping deposit growth over the past couple of years, lenders have been compelled to mobilise funds through higher deposit rates or issuances of debt instruments.
Shares of Indian Bank closed at Rs. 518.4 a piece, 0.89% higher, according to BSE.
The country’s largest lender State Bank of India has led the pack with total infrastructure bond issuances worth Rs 20,000 crore so far in FY25.
In the recent months, Axis Bank raised Rs. 3,925 crores, Bank of Baroda raised Rs. 3,500 crores and Canara Bank raised Rs 10000 crores through bond issuances.
