Punjab And Sind Bank Raises Rs 3,000 Crore Through Maiden Infrastructure Bond Issuance

State-owned Punjab & Sind Bank raised Rs 3,000 crore on Wednesday through the issuance of its first infrastructure bonds, aimed at boosting its infrastructure lending capabilities.

The bank received bids totaling Rs 6,031 crore, significantly exceeding the base issue size of Rs 500 crore, according to a regulatory filing. The bank has decided to accept bids worth Rs 3,000 crore at an annual coupon rate of 7.74%.

As per RBI guidelines, these 10-year bonds will be listed on the National Stock Exchange for trading.

These bonds are unsecured, subordinated, redeemable, non-convertible, taxable, fully paid-up long-term instruments, with a face value of Rs 1 lakh each. The allotment of bonds to successful bidders is scheduled for Friday.

Domestic investors have shown strong interest in such bond issuances by banks, with several lenders opting for this method to raise funds recently.

One of the key advantages of infrastructure bonds is that they are exempt from regulatory reserve requirements, such as the Cash Reserve Ratio and Statutory Liquidity Ratio, allowing the full proceeds to be deployed for lending purposes.

Banks have increasingly favored infrastructure bonds over AT-1 and Tier-2 bonds due to their more attractive pricing.

Earlier, the lender planned to raise Rs 2,000 crore, with approval from its board on Wednesday. It plans to raise the amount in one or more tranches within 12 months from the approval date.

The funds will be raised through equity shares via public issues, rights issues, qualified institutional placements, preferential issues, or other methods, as per the filings.

Shares of Punjab & Sind Bank closed 1.09% lower at Rs 50.79 apiece on the National Stock Exchange, compared to a 0.56% decline in the benchmark Nifty. The stock has risen 10.77% in last 12 months and 17.71% year-to-date.

(With PTI Inputs.)