The Central Bank of India will raise up to Rs 1,500 crore this fiscal by issuing Basel III-compliant bonds.

The fund mobilisation comes at a time the banking sector is witnessing strong demand for credit. The decision was taken at the bank’s board meeting held on Monday.

The state-owned lender said in a regulatory filing that its board of directors considered and approved a proposal to raise capital through the issuance of non-convertible redeemable unsecured Basel III compliant Tier II bond. The base issue size is of Rs 500 crore with a green shoe option up to Rs 1,000 crore.

With demand for credit growing at 17 per cent at present, banks have begun to increase their deposit rates or tap the debt markets.

Recently, the board of the SBI approved a proposal to raise Rs 10,000 crore via additional Tier-1 (AT-1) bonds until March 31, 2024.

The country’s largest lender has already raised almost Rs 10,800 crore in September.

Lenders are also raising their deposit rates. Bank of Baroda on Monday announced that it has increased the interest rates of retail term deposits of various tenors by up to 65 basis points.

A one-year deposit with the lender will earn 6.75 per cent as against 6.10 per cent earlier.

BoB added that interest rates have also been hiked onthe special plan ‘Baroda Tiranga Plus Deposit Scheme’.The scheme now offers interest rates up to 7.80 per cent, which includes 50 basis points for senior citizens and 0.25 percent for non-callable deposits.

The card rate in this scheme for other borrowers stand at 7.05 per cent, against6.75 per cent earlier.

According to the latest RBI data while the credit growth stood at 17.5 per cent as on December 2, 2022, the deposit growth was at 9.9 per cent.