United Bank plans to raise Rs500 crore via Basel III complaint bonds
New Delhi: State-owned United Bank of India plans to raise up to Rs500 crore to comply with the global standard Basel III banking norms by March 2019. The board of directors of the bank proposes to consider and approve by circulation on 20 November, issuance and allotment of Basel III compliant listed additional tier-I debt instruments in the nature of bonds, the bank said in a regulatory filing on Wednesday.
It said the bonds with face value of Rs10 lakh each, with or without green shoe option, are to aggregate up to Rs500 crore. Banks globally have to comply with the Basel III norms so as to improve and strengthen their capital planning processes.
These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks post the global sub-prime crisis of 2008 that hit the banking industry hard.
Indian banking system has been implementing Basel III standards in phases since 1 April, 2013. The banks are expected to fully implement these norms by March 2019. This will align full implementation of Basel III in India closer to the internationally agreed date of 1 January 2019. United Bank of India shares closed 0.29% down at Rs17.25 apiece on BSE on Wednesday.