This makes Allahabad Bank the second bank among public sector ones to take to the book-building route after Union Bank of India which raised Rs 500 crore in August 1999 at a cut-off rate of 12.50 per cent. Vijaya Bank is also in the market to raise Rs 60 crore from a 12.35 per cent bond issue having a maturity of 84 months. The bonds to be issued by Allahabad Bank will have a bullet repayment after 88 months from the deemed date of allotment. The bank will issue unsecured, subordinated bonds series I of the face value of Rs 25 lakh each at par.

For the book-building process, the bank has given an indicative coupon rate of 12.30 to 12.50 per cent payable annually. According to bank sources, RBI allows the coupon rate to be fixed at a maximum of 200basis points above the current yield on gilt securities of comparable maturity profile.

Assuming an yield of 11.50 per cent on gilts, the bank could have fixed a maximum coupon of 13.5 per cent.