Indian banks, including top lender State Bank of India, have raised around 87 billion rupees ($1.05 billion) through perpetual bonds so far this fiscal, just about a quarter of fiscal 2023, with most struggling to raise even the targeted amount at auctions.
Diminishing lure for perpetual bonds is likely to prompt Indian state-run banks switch to the equity market for raising funds in coming months, five banking sources told Reuters this week.
Indian banks, including top lender State Bank of India, have raised around 87 billion rupees ($1.05 billion) through perpetual bonds so far this fiscal, just about a quarter of fiscal 2023, with most struggling to raise even the targeted amount at auctions.
“With deposit rates inching higher, banks will have to pay a higher coupon on their debt securities, especially with mutual funds staying away from investing in perpetual debt,” a senior official at a large state-run bank said.
Market regulator Securities Exchange Board of India had in March 2021 said that additional Tier 1 bonds would be considered to have a deemed maturity of 100 years, starting April 2023.