Bank of India (BoI), a public sector undertaking lender, has announced the successful raising of ₹2,000 crores through Basel III compliant Tier II bonds. The bonds carry an annual interest rate of 7.88 percent and were issued through NSE’s Electronic Bidding Provider Platform.
In a press release, BoI revealed that the fundraising process garnered significant interest, with a total of 83 bids amounting to ₹3,770 crores. Out of these bids, 48 were successful, resulting in a total capital raise of ₹2,000 crores.
The issuance of Tier II capital is in line with regulatory guidelines set by the Reserve Bank of India (RBI). These guidelines require banks to maintain an adequate level of capital to safeguard their financial stability and protect the interests of depositors. Tier II capital is an important component of a bank’s capital structure and plays a crucial role in enhancing the bank’s long-term resources.
It’s important to note that the funds raised through this Tier II bond issue are not earmarked for financing any specific project. Instead, the proceeds will be utilized to strengthen the overall capital base of Bank of India and support its regular business activities.
This capital infusion is a strategic move by BoI to ensure it complies with the Basel III norms, which are international banking standards aimed at promoting financial stability and risk management in the banking sector. Under Basel III, banks are required to maintain a minimum level of capital, including Tier II capital, to mitigate risks and absorb losses in times of economic stress.
Bank of India is committed to maintaining a robust financial position and adhering to regulatory requirements, thereby safeguarding the interests of its depositors and stakeholders. The successful completion of this Tier II bond issuance demonstrates the bank’s ability to access capital markets and raise funds as needed to support its growth and operations.
The Tier II bond issuance also reflects the bank’s proactive approach to capital management and its commitment to aligning its capital structure with regulatory requirements. By securing this additional capital, Bank of India is better positioned to navigate the dynamic banking landscape and continue serving the financial needs of its customers effectively.