Central Bank of India raises Rs. 500 crores via bonds

Public sector lender, Central Bank of India informed the exchanges on Monday that it has raised Rs. 500 crore through Tier II bonds. Despite this positive move, the stock of Central Bank of India closed down by 1.38 per cent in BSE.

In the press release, the bank stated that - the Capital Raising Committee of Central Bank of India at its meeting held on September 30, 2019 has allotted 500 numbers of Non-Convertible, Taxable, Redeemable Unsecured Basel III compliant Tier II Bonds (Series IV) aggregating to Rs.500 crores.

The tier-II bonds under Basel III is a hybrid subordinated instrument with equity-like loss-absorption features. These rated instruments are expected to absorb losses once the “point of non-viability” (PONV) trigger is invoked. ICRA has assigned ‘A+’ rating to the proposed bond offering.

To meet regulatory norms for capital adequacy, Central Bank of India plans to raise Rs. 2,000 crore capital through tier-II bonds. Central Bank will be one of the two public sector banks that will continue to work as an independent bank to strengthen national presence.

Central Bank of India is a commercial bank. The bank’s segments include Treasury Operations, Corporate/Wholesale Banking, Retail Banking and other Banking business. The promoters holding in the company stood at 89.46 per cent, while Institutions and Non-Institutions held 6.67 per cent and 3.87 per cent, respectively.

Shares of Central Bank of India opened in BSE at Rs.18.15 as compared to the previous close of Rs. 18.10. The stock hit an intraday high of Rs. 18.35 and low of Rs. 17.55. The stock finally closed at Rs. 17.85, down by 1.38 per cent.