look news india
Mumbai: The funds raised by banks through bonds in a country grappling with liquidity stress are expected to reach an all-time high of Rs 1.20 to Rs 1.30 lakh crore in the current fiscal.
The country's banking system is currently witnessing higher loan growth than deposit growth, due to which banks are facing liquidity stress.
In the financial year 2023, banks raised Rs 1.10 lakh crore through bonds, which is the highest level ever. In the last financial year, this figure was Rs one trillion (one lakh crore).
Liquidity stress has forced banks to turn to alternative sources of funding. In the current financial year, banks have so far raised a total of Rs 767 billion through bonds, a 225 per cent year-on-year increase and equivalent to 75 per cent of the amount raised in FY24, an ICRA report said. centralization While public sector banks are struggling to meet the demand for loans by raising funds through bonds.
Further, the continued focus on infrastructure spending by the Government of India and the demand from insurance companies and provident funds for long-term bonds are supporting the issuance of infra bonds.
Usually, a minimum tenure of seven years is required for infrastructure bonds, but considering the demand for long-term bonds, 10 to 15 year bonds are also being issued.