Bank of Baroda on Friday said its board has approved raising up to $7 billion through bonds and issuance of certificates of deposits (CDs). The bank will raise up to $1 billion under its medium-term note programme, up to $3 billion through issuance of CDs and up to $3 billion through bilateral and other borrowings, it said in a filing with the exchanges.
“As banks’ credit-to-deposit ratio (CD ratio) is rising, they are approaching the market with liabilities products such as certificates of deposits, refinancing, bonds, among others,” said Sanjay Agarwal, senior director at CareEdge ratings.
The main factor that separates a CD account from a savings account is the access to money. While both types of accounts typically discourage withdrawals, money in CD accounts is essentially locked, and early withdrawals are likely to come with a penalty.
Bank of Baroda’s total deposit stood at Rs 11.49 trillion as on December end, up 17% on a year-on-year basis. Advances grew 20% to Rs 9.23 trillion. The bank raised its marginal cost of funds-based lending rate (MCLR) on overnight tenure by 5 basis points to 7.95% on April 12, and raised the same on the one-year tenure by 5 bps to 8.60%.
The stock on Friday ended down 0.7% to Rs 176 on the BSE.