Board of Bank of Baroda (BoB) To Meet Tomorrow To Discuss Fundraising Plan

To discuss and finalise the issuance of Tier I and Tier II debt capital instruments and long-term bonds for the financing of infrastructure and affordable housing within the board-approved capital raising plan, Bank of Baroda has set up a meeting of the Capital Raising Committee for tomorrow, November 18, 2023.

"We advise that Meeting of Capital Raising Committee of our Bank is scheduled to be held on 18.11.2023 to discuss and finalize the issuance of Tier I and Tier II debt capital instruments and long-term bonds for the financing of infrastructure and affordable housing within the board-approved capital raising plan," said BoB in a stock exchange filing.

Recently on 13th November, India Ratings assigned IND AAA/Stable rating to Bank of Baroda's INR 10000 crores of Infrastructure and Affordable Housing Bonds and affirmed the existing ratings as per the press release by India Ratings.

"The ratings continue to reflect BOB's high-systemic importance to the government of India (GoI; 63.97% stake as of September 2023), and hence, a high probability of support from the GoI, if required. The ratings also reflect BOB's large franchise with a pan-India and relatively large international presence, strong capitalisation, and superior liquidity and asset quality metrics, which are better than comparable public sector banks (PSBs)," said India Ratings in a statement.

"The Reserve Bank of India, in a recent press release citing material supervisory concerns regarding lapses in internal audit, has directed BOB to suspend onboarding of customers through its mobile application, Bob World. Ind-Ra believes that the move is likely to impact the bank's ability to sustain its liability growth, primarily CASA generation through onboarding of new salary accounts in urban and metro regions, as about 98% and 91% of SA and CA are being sourced digitally.

Moreover, 58% of fixed deposits and 42% of recurring deposits, which are being booked through Bob World, are likely to be negatively impacted. However, in terms of assets, the impact would be limited as cross-selling for retail products (personal loans and credit cards) to existing Bob World customers would be sufficient to meet growth requirements in the medium term. The continuing of transactions through internet banking, tab banking and branch banking would remain unaffected. The agency understands that BOB has already taken remedial measures and is awaiting a review of the measures taken by the RBI to resolve the issue," said the rating agency in a regulatory filing.

As of FYE23, BOB operated a network consisting of 1,637 cash recyclers, 9,764 ATMs, 8,200 branches throughout India, and 93 overseas offices spread across 17 countries. In FY23, loans to the corporate segment made up 35.1% of the advances book, retail loans made up 18.4%, MSME loans made up 11.2%, agricultural loans made up 12.8%, and other loans made up 4.6%. 17.9% of gross advances in FY23 came from international advances.