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Bank of Maharashtra raises Rs 290 crore via AT1 bonds

The Pune-based lender mentioned the Rs 290 crore capital raised by the AT1 bonds will help business progress of the financial institution.

Public sector lender Bank of Maharashtra (BoM) on Thursday mentioned it has raised Rs 290 crore by issuing Basel III compliant bonds.

The financial institution issued Basel III compliant further tier 1 (AT1) bonds of Rs 290 crore, together with inexperienced shoe choice of Rs 40 crore, on Wednesday at a coupon rate of 8.75 per cent, the lender mentioned in a press release.

“The issue garnered overwhelming response from investors with bids of Rs 1,055 crore received against a base issue size of Rs 250 crore, which is an indicator of the trust the investors place on the bank,” BoM mentioned.

The Pune-based lender mentioned the Rs 290 crore capital raised by the AT1 bonds will help business progress of the financial institution.

The AT1 instrument is perpetual in nature with name choice after 5 years, mentioned the lender.

Perpetual bonds carry no maturity date, so they might be handled as fairness, not as debt.

The financial institution has credit score rankings of AA (Stable) for AT1 bonds from Acuite and Infomerics ranking businesses.

To adjust to Basel-III capital rules, banks globally want to enhance and strengthen their capital planning processes.

These norms are being carried out to mitigate considerations on potential stresses on asset high quality and consequential influence on efficiency and profitability of banks.

Indian banking system has been implementing Basel III requirements in phases since April 1, 2013.

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