Bank of Baroda raises ₹10,000 crore via India’s first domestic green infrastructure bonds

State-run lender Bank of Baroda  has raised ₹10,000 crore through the issuance of long-term green infrastructure bonds, becoming the first bank in India to issue domestic green bonds.

The seven-year Series I bonds were issued through the electronic book platform of the National Stock Exchange of India and carried a competitive coupon of 7.10% per annum. The issue saw strong investor demand, receiving bids worth ₹16,415 crore, more than three times the base issue size of ₹5,000 crore, the PSU bank said in a statement.

The bank had launched the offering with a base issue of ₹5,000 crore along with a greenshoe option of another ₹5,000 crore, both of which were fully subscribed despite prevailing market volatility.

According to the bank, the tight pricing enabled it to achieve a “greenium” - a pricing advantage typically associated with green bonds - reflecting investor confidence in its environmental, social and governance (ESG) roadmap and commitment to sustainable finance.

Funds to be used for green projects

Debadatta Chand, Managing Director and CEO of Bank of Baroda, said the green infrastructure bond issue marks a significant milestone for the bank as well as India’s domestic ESG bond market.

“Raising ₹10,000 crore with such strong demand and attractive pricing demonstrates the deep confidence investors have in the bank and in our commitment to green and sustainable growth as part of our broader ESG journey,” he said. The funds raised will help support India’s infrastructure requirements and enable a transition towards a cleaner and more sustainable economy.

The proceeds from the bond issue will be deployed toward eligible green projects in line with the bank’s green financing framework and regulatory guidelines. These include sectors such as renewable energy and other environmentally sustainable infrastructure projects.

Rated AAA by CARE Ratings and ICRA

The bonds have been assigned ‘AAA’ ratings with a stable outlook by CARE Ratings and ICRA.

ICRA said the stable outlook reflects the bank’s strong liability profile, steady asset quality and internal capital generation, which are expected to support its profitability and capitalisation. The agency also expects the bank to remain self-sufficient in meeting capital requirements for growth and absorbing potential stress while maintaining capital buffers above regulatory levels.

CARE Ratings, which reaffirmed its existing ratings of CARE AAA (Stable) for Tier II bonds and green infrastructure bonds and CARE A1+ for certificates of deposit, said its assessment continues to factor in the majority ownership and expected support from the Government of India given the bank’s systemic importance as one of the largest public sector banks in the country.