Punjab & Sind Bank Raises ₹3,000 Crore via Infrastructure Bonds

Punjab & Sind Bank has successfully secured ₹3,000 crore through the issuance of its inaugural infrastructure bonds, significantly enhancing its capacity for infrastructure lending.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The offering attracted overwhelming interest, with bids totaling ₹6,031 crore against an initial base issue size of ₹500 crore. These bonds, issued at an annual coupon rate of 7.74%, come with a 10-year tenure and are set to be listed on the National Stock Exchange (NSE).

The infrastructure bonds have garnered preference over AT-1 and Tier-2 bonds due to their more favorable pricing and exemption from regulatory reserve requirements, such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). This enables the bank to fully allocate the proceeds toward lending activities—a strategy that has resonated well with domestic investors.

The issuance had a base size of ₹500 crore and included a green shoe option of ₹2,500 crore. Rated “AA” by CRISIL and India Ratings, these bonds are categorized as unsecured, subordinated, redeemable, non-convertible, taxable, and fully paid-up. Each bond was priced at ₹1 lakh, culminating in the issuance of 3,00,000 bonds.

The bidding process took place on the NSE’s Electronic Bidding Platform (EBP), where 93 bids were received, of which 52 were accepted. The deemed date of allotment is December 20, 2024.

The long-term infrastructure bonds are fully exempt from CRR and SLR requirements, enabling the bank to dedicate the entire proceeds exclusively to lending. This initiative supports Punjab & Sind Bank’s goal of achieving a 13-14% credit growth target for the fiscal year.

In the second quarter of FY25, the bank reported a 26% increase in net profit, reaching ₹240 crore, driven by a significant reduction in non-performing loans (NPLs). Total income for the quarter rose to ₹3,098 crore, reflecting a year-on-year increase from ₹2,674 crore, while interest income climbed by 14% to ₹2,739 crore.

Asset quality improvements were also notable, with Gross Non-Performing Assets (NPAs) decreasing to 4.21% of gross advances as of September 2024, compared to 6.23% a year earlier. Similarly, net NPAs declined to 1.46% from 1.88% during the same period.

On December 18, 2024, Punjab & Sind Bank’s share price dipped by 1.25%, closing at ₹50.71 on the Bombay Stock Exchange (BSE) at 2:51 PM IST.