State-owned Bank of India (BoI) has announced plans to raise ₹5,000 crore through infrastructure bonds during the fourth quarter of FY25. The bank’s board approved the decision, as per a regulatory filing on Thursday.
The move aligns with the growing trend among banks to leverage infrastructure bonds, which offer unique advantages over traditional funding instruments.
Why Infrastructure Bonds?
Infrastructure bonds are exempt from regulatory reserve requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). This allows banks to fully utilize the proceeds for lending activities, particularly in the infrastructure sector.
Additionally, these bonds are increasingly preferred over AT-1 and Tier-2 bonds due to better pricing, making them a cost-effective resource mobilization tool.
Market Demand
Domestic investors have shown significant interest in infrastructure bonds, driving a surge in such issuances by banks in recent months. This demand highlights the growing confidence in infrastructure development as a critical driver of economic growth.
BoI’s fund-raising initiative is expected to bolster its lending capacity and support key infrastructure projects, contributing to the country’s economic development.
