Mumbai: State-owned Bank of India (BoI) has announced plans to raise Rs 20,000 crore during the current financial year through the issuance of long-term infrastructure bonds. This move was approved by the bank’s board and disclosed in a recent regulatory filing.
Infrastructure Bonds: A Preferred Funding Route
Banks, including major players like SBI and BoI, have increasingly been turning to infrastructure bonds as a key instrument to raise dedicated funds for infrastructure projects. These bonds offer several advantages over other instruments such as Additional Tier-1 (AT-1) and Tier-2 bonds, including more favorable pricing.
Regulatory Benefits Boost Lending Capacity
One of the primary benefits of infrastructure bonds is their exemption from regulatory reserve requirements such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). This means that the funds raised can be fully deployed for lending activities, allowing banks greater flexibility in financing infrastructure projects.
Boost to Infrastructure Development
The issuance of these bonds aligns with the broader push by the government and financial institutions to accelerate infrastructure development across India. With dedicated funding, banks can support large-scale projects crucial to the country’s economic growth and modernization.
BoI’s Strategic Move
BoI’s decision to raise Rs 20,000 crore via infrastructure bonds in FY 2025-26 underscores the bank’s commitment to playing an active role in financing India’s infrastructure needs, while optimizing its capital structure through cost-effective funding instruments.
