ICICI Bank to raise up to `1,000 crore via bonds for infra lending
The money will be raised by selling bonds via a private placement
Mumbai: ICICI Bank Ltd could become the first bank to take advantage of Reserve Bank of India’s (RBI’s) relaxation in norms for funds lent to long-term infrastructure and affordable housing projects as it seeks to raise up to ₹ 1,000 crore to lend to these sectors, three people familiar with the plan said.
“The money will be raised by selling bonds via a private placement. It is a 10-year bond. They are planning a ₹ 500 crore issue with an option to retain another ₹ 500 crore," said a banker familiar with the deal.
Reply to a query sent to ICICI Bank was still awaited. A private placement is one in which the issue is sold to less than 50 investors.
ICICI Securities Ltd, the merchant banking arm of the bank, is in charge of the deal, said a second banker, adding that the timing of the issue still needs to be worked out.
If successful, it will make ICICI Bank the first bank to raise money through a special RBI window under which banks are exempted from the mandatory requirements.
“This could be the first of many such issues. There may be other banks also lining up such issues in the near future," a third banker said.
Earlier this month RBI announced that the money raised by banks to lend to long-term infrastructure projects or housing projects for low income groups will be exempt from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirement.
CRR, which is now 4%, is the proportion of deposits that banks keep with RBI while SLR, now 22.5%, is the proportion of deposits banks have to invest in government securities.
Separately, Bloomberg reported that the bonds would offer a coupon rate of 9.15%, compounded half yearly, citing a person familiar with the offering.
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