Indian Overseas Bank (IOB) plans to raise Rs 800 crore through perpetual bonds in three months.
On December 8, the bank’s board of directors had approved a plan to raise Rs 800 crore through Tier-I (perpetual bonds). However, the bank had postponed the plan due to changes introduced by the Reserve Bank of India in the implementation of Basel-III norms.
Chairman and Managing Director M Narendra said the implementation (transition) of Basel-III norms had been postponed by three months and the market was assessing the transition and its implications on bond issuances. “It is not necessary to issue the bond right now. That will be issued according to the market maturity in the next three months, if at all we need it,” he said.
Perpetual bonds are not redeemable and have no maturity date. However, the bondholder receives a steady stream of interest on the perpetual bond. In case IOB raises funds through perpetual bonds, along with the proposed preferential share capital to be raised from the government, its Tier-I capital would rise to more than eight per cent by the end of the current financial year, Narendra said. The bank has sought infusion of about Rs 1,500 crore from the Centre this financial year.