BoB to raise Rs 1,000 crore through bonds soon
State-owned Bank of Baroda (BoB) plans to raise Rs 1,000 crore from bonds soon to fund business expansion.
“We have decided to raise Rs 1,000 crore from Additional Tier-I (AT-1) bonds,” BoB Executive Director Rajan Dhawan said.
“This is to augment additional Tier-I Capital of the bank,” he said. Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the RBI.
AT-1 bonds, which qualify as core or equity capital, are one of the means of raising capital by public sector banks that require Rs 2.40 lakh crore by March 2019 to meet global norms on capital adequacy (Basel III). Besides, the board has decided to fix January 23, 2015 as the record date for determining the shareholders of the bank, who are entitled to receive the equity shares of the bank upon the sub division.
As per the share split scheme, one existing equity share of face value of Rs 10 each would be split into five equity shares of face value of Rs 2 each fully paid up.