News reports suggest that Canara Bank and Axis Bank are likely to tap the AT1 bond route to raise funds in the near future. The former could raise anywhere between Rs1,500-2,000 crore.
Experts believe easing yields in the sovereign bond market is helping banks raise funds at attractive rates.
All eyes will now be on State Bank of India (SBI), which will sell AT-1 bonds worth Rs7,000 crore today. Experts believe the cut-off for SBI’s AT-1 bonds could be ~7.75%.
As per the latest Financial Stability Report issued by the Reserve Bank of India (RBI), Indian banking system’s capital-to-risk weighted assets ratio (CRAR) stood at 16.7% in March 2022. In order to comply with RBI’s mandate of maintaining CRAR at a minimum of 9%, banks need to be well-funded.
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