Punjab Sind Bank to raise upto Rs 3K cr via Infra bonds, appoint bankers | Banking
 "Punjab & Sind Bank")
CRISIL has assigned an ‘AA\Stable’ rating to the proposed infrastructure bonds. | File Photo
Public sector lender Punjab & Sind Bank (PSB) is planning to raise up to Rs 3,000 crore through infrastructure bonds as a cost-effective means amid stiff competition for deposits.
Banks, especially state-owned ones, have been actively raising funds through infrastructure bonds in the current financial year. The country’s largest lender, State Bank of India, raised Rs 20,000 crore in two tranches through 15-year infra bonds in June and July. Additionally, Bengaluru-based public sector lender Canara Bank raised Rs 10,000 crore through 10-year infrastructure bonds at 7.4 per cent, and Bank of India raised Rs 5,000 crore through 10-year instruments at 7.54 per cent in July.
Swarup Kumar Saha, managing director and chief executive officer of PSB, told Business Standard that the softening of bond yields is creating a conducive atmosphere for raising funds at relatively lower rates. “The bonds will be issued in tranches. In the first instance, the bank intends to raise up to Rs 3,000 crore, depending on market conditions.”
CRISIL has assigned an “AA\Stable” rating to the proposed infrastructure bonds.
Domestic bond yields generally softened in August and September (up to September 17). The yield on the 10-year Indian benchmark government security (G-sec) moved within a narrow range of 6.76-6.87 per cent, according to the State of the Economy report in the Reserve Bank of India’s monthly bulletin (September 2024).
Funds raised through infrastructure bonds are attractive from a bank’s point of view, as they are exempt from regulatory reserve requirements such as the statutory liquidity ratio (SLR) at 18 per cent and the cash reserve ratio (CRR) at 4.5 per cent. They are also exempt from Priority Sector Lending (PSL) requirements.
The bank has approvals in place for an overall fundraise of around Rs 10,000 crore. This includes a Qualified Institutional Placement (QIP) for an equity offering of Rs 2,000 crore, Rs 5,000 crore in infra bonds, and Rs 3,000 crore in 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 for the equity share offering.
PSB’s infrastructure loan book expanded by 16.65 per cent year-on-year (Y-o-Y) to Rs 15,274 crore in June 2024, accounting for about 19.02 per cent of its total credit. Out of this, the energy segment had the highest share with Rs 5,462 crore, followed by roads and ports at Rs 3,390 crore, according to an analyst presentation for Q1 FY25.
First Published: Sep 22 2024 | 2:41 PM IST
