IDBI Lines 3,500 Crore Bonds

MUMBAI, INDIA (GaeaTimes.com)- IDBI Bank have announced their decision to raise a total of Rs 3,500 crore which in their opinion shall act as a great boost to the bank’s CAR (Capital Adequacy Ratio). The officials of IDBI told the media that the bank has plans in store to throw in an offer of 10-year and 15-year papers, and are looking forward to a coupon in the range of 8.25-8.75%.

CAR happens to be the capital ratio of the bank which is calculated in accordance to the risk associated with weighted assets which is used to protect the depositors in the bank. Besides, it shall also help IDBI to be more stable and more efficient in all round functioning of the bank. As per the guidelines set by the Reserve Bank Of India all banks shall have to maintain a CAR of 9% under all circumstances. Taking the Tier-I capital requirement in consideration, IDBI is speculated to pull out massive capital infusion from the government’s end. IDBI which happens to be a public sector bank shall be immensely benefited by such huge earnings which shall act as a great boost to Tier-I capital for the bank.The strategy was also discussed in the Budget by finance minister Pranab Mukherjee.

The finance ministry has also gone ahead to have approved a total infusion of Rs 6,211 crore capital over five public sector banks which also includes IDBI bank. It was declared that IDBI along with other banks shall receive a total of Rs 3,119 crore from Government in terms of it’s stake which is slotted somewhere in between 52.67%- 65%. The capital amount shall be infused in the upcoming month of September following the preferential allotment of equity.