Punjab & Sind Bank to raise ₹3,000 crore through infrastructure bonds – CNBC TV18

Punjab & Sind Bank is set to raise ₹3,000 crore in its first-ever infrastructure bond issuance, aiming to boost its loan book and support growth. The bank’s Managing Director and CEO, Swarup Kumar Saha, confirmed that the board has approved a plan to raise up to ₹5,000 crore in infrastructure bonds in multiple tranches, with the first tranche targeting ₹3,000 crore.

The bond issuance is expected to take place in the third week of December 2024, with a base size of ₹500 crore and a greenshoe option of ₹2,500 crore.

The bonds will carry a 10-year tenure in line with Reserve Bank of India (RBI) guidelines and have received an ‘AA’ rating from domestic rating agencies.

The proceeds from the issuance will be utilised over the next two quarters and will be listed on the National Stock Exchange (NSE) for trading.

These infrastructure bonds offer an advantage over other forms of fundraising, as they are exempt from the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, allowing the full amount raised to be deployed for lending purposes.

Given this advantage, many banks have turned to infrastructure bonds in recent years.

The bank aims for a credit growth of 13-14% in the current financial year.

Recently, Punjab & Sind Bank has seen significant improvement in its financial performance. For the second quarter of FY24, the bank reported a 26% increase in net profit to ₹240 crore, driven by a reduction in non-performing loans (NPLs).

Total income rose to ₹3,098 crore from ₹2,674 crore year-on-year, while interest income also increased by 14% to ₹2,739 crore.

In terms of asset quality, the bank’s gross non-performing assets (NPAs) declined to 4.21% of gross loans as of September 2024, compared to 6.23% a year ago. Net NPAs also improved, easing to 1.46% from 1.88% in the same period last year.

-With inputs from PTI