Punjab Sind Bank to raise up to Rs 3000 crore via Infra bonds

by Psu Connect
Date: 23-09-24
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Banks, especially state-owned ones, have been actively raising funds through infrastructure bonds in the current financial year.

Punjab Sind Bank to raise up to Rs 3000 crore via Infra bonds

The public sector lender Punjab and Sind Bank is planning to raise Rs 3,000 crore through infrastructure bonds as a cost-effective means, amidst stiff competition for deposits.

Banks, especially state-owned ones, have been actively raising funds through infrastructure bonds in the current financial year.

Funds raised through infrastructure bonds are attractive from a bank’s point of view since they are exempt from taxes from regulatory reserve requirements such as the statutory liquidity ratio (SLR) of 18 percent and cash reserve ratio (CRR) of 4.5 percent. They are also exempt from priority sector lending (PSL) requirements.

Punjab and Sind Bank have approvals in place for an overall fundraising of around Rs 10,000 crore. This includes qualified institutional placement (QIP) for equity offering of Rs 2,000 crore, Rs 5,000 crore of infra bonds, and Rs 3,000 crore of additional Tier 1 and Tier 2 bonds.

The bank is in the process of appointing merchant bankers for the proposed QIP, Saha said. However, he did not indicate the timing of the equity share offering.

CRISIL has assigned an “AA\Stable” rating to the proposed infrastructure bonds of the bank.

The domestic bond yields softened in August and September (up to September 17). Yield on the 10-year Indian benchmark government security (G-sec) moved in a narrow range of 6.76 - 6.87 percent, according to the State of Economy report in the Reserve Bank of India’s (RBI’s) monthly bulletin (September 2024).