IDBI will raise around Rs. 1500 crores by way of Tier-II bonds in the coming 12 months. This is to support credit growth and Basel II norms and supplement for capital bonds that will be redeemed over next few months. Present capital base can support 20% annual growth in assets for next two financial years. However, the bank wants to provide adequate cushion for business expansion and Basel II compliance. Currently, IDBI has an outstanding Tier-II bond portfolio of Rs. 5000 crores. A part of this bond portfolio will mature soon. The new bonds may be issued in tranches depending on the business requirement over a year. The lower Tier-II bonds will have tenure ranging between 5 and 10 years and will carry slightly higher coupon rate than debentures. CRISIL has assigned an AA+ rating to the proposed issue. The public sector bank has raised Tier-II capital of about Rs. 1418 crores till date in the present financial year. The bank is adequately capitalized with CAR of 14.09% at end of December 2006.
Read more in the Business Standard article.
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