State-owned Bank of Baroda said on Wednesday it proposes to raise Rs 1,500 crore from Additional Tier-I (AT-1) bonds to fund its business growth.
The bank has decided to raise funds by way of private placement of AT-1 bonds (Basel III Compliant - Tier l) of Rs 1,000 crore with a greenshoe option of additional Rs 500 crore, BoB said in a statement.
“This is to augment additional Tier-I Capital of the bank,” it 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).
