Axis Bank is set to raise up to ₹3,000 crore by selling additional tier-1 (AT-1) bonds in the coming days. This move aims to strengthen its core equity capital as the bank experiences faster growth in loans compared to deposits.
The bank will provide details for the bond sale on Thursday, with a base amount of ₹1,000 crore and an option to raise an additional ₹2,000 crore if demand is high. The bonds will likely have a 10-year call option, and the interest rate offered to investors is expected to be between 8.30% and 8.35%.
Earlier this month, Axis Bank raised ₹3,925 crore by selling 10-year infrastructure bonds at a lower interest rate of 7.45%.
AT-1 bonds are long-term bonds that allow banks to absorb losses during financial difficulties. Because these bonds come with higher risks, they usually offer higher interest rates compared to other debt securities. Recently, the banking sector has seen more loan growth than deposit growth, prompting banks to issue bonds to meet the increasing credit demand.
As of early September, bank credit grew by 14.7% compared to a 11.6% growth in deposits, according to the Reserve Bank of India.
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