MUMBAI: Struggling to raise lendable funds through deposits, public-sector banks led by the State Bank, Canara Bank and Bank of India among others are on an aggressive bid to tap the infrastructure bond market, which is long-term money at comparatively cheaper rates.
Struggling to raise lendable funds through deposits, public-sector banks like State Bank, Canara Bank, and Bank of India among others are on an aggressive bid to tap the infrastructure bond market.
This would provide long-term money at comparatively cheaper rates. Within the past 30 days, they have already mopped up close to Rs 40,000 crore from such debt capital.
Money raised through infra bonds is effectively cheaper as the issuer is not obligated to meet the statutory liquidity ratio (SLR) and the cash reserve ratio (CRR) requirements with this money, unlike deposits.
Current CRR is 4.5 per cent while SLR is 18 per cent, which is parked/invested in government securities. However, a bank cannot lend the money raised through infrastructure bonds to any other sector or purpose.
