Post-ICICI Bank Sanction, RBI Nod For IDBI Bond Issue Likely

Mumbai, December 22: | Updated: Dec 23 2002, 05:30am hrs
ICICI Bank, which has become the biggest private sector bank after the reverse merger of its parent ICICI Ltd, has secured a special one-time approval from the Reserve Bank of India (RBI) for issuing tax-free bonds worth Rs 2,500 crore, with a greenshoe option for the same amount.

In another interesting development, RBI has also promised to allow the Industrial Development Bank of India (IDBI) to raise funds through tax-free bonds after its proposed conversion into a universal bank, as a special case.

We have approached the RBI to know the policy status on the issue of allowing banks to raise funds through tax-free bonds. Explaining the circumstances under which the special facility was allowed to ICICI Bank, they have promised IDBI that the regulator would allow such a facility after its conversion, sources told FE.

Being a financial institution still, IDBI has already launched its Flexibond series, which also includes tax-free bonds.

On Friday last, ICICI Bank has also got the approval for its umbrella prospectus from the Securities and Exchange Board of India (Sebi). The approval is valid for issues up to December 19, 2003.

This facility, which was being offered only to development financial institutions so far, was offered to ICICI Bank as a special case considering the circumstances obtaining from ICICI Ltds reverse merger in March 2002, according to industry sources.

RBI has earlier said that the banks converting themselves into universal banks will lose all the privileges enjoyed by them as FIs and they might have to adhere to all the norms that are applicable to other commercial banks.

Responding to a query, ICICI Bank, head, retail channels and liabilities, Amitabh Chaturvedi, told FE that the bank was planning to hit the market in the first week of January with an issue amounting to Rs 400 crore, with an option to retain additional Rs 400 crore.

However, he was not ready to divulge information on the schemes and the rates offered as the papers are yet to be filed with the Registrar of Companies (RoC).

There will be three issues made during the remaining part of the current fiscal, totalling Rs 2,000 crore, and a greenshoe option for the same amount, Mr Chaturvedi said. The banks former parent ICICI Ltd had raised Rs 4,400 crore through bond issues during 2001-02.