HDFC Bank plans infra bond swap for securities of parent HDFC Ltd
HDFC Bank is discussing with investors and the regulator a plan through which the country's most-valued lender would buy back some of the bonds issued by the erstwhile HDFC, and replace these instruments with new infrastructure bonds to be sold to the same set of investors holding the securities.
This exercise, if approved, would help HDFC Bank cut interest costs as bank infrastructure bonds have the advantage of exemptions from regulatory reserve requirements like Statutory Liquidity Ratio and Cash Reserve Ratio.
«They (HDFC Bank) are likely to come out with a large infrastructure bond issuance soon. What they are proposing to some investors like insurance companies is that based on their subscription to the new infrastructure bond issuance, the bank would buy back securities that had been issued by HDFC Ltd before the merger was effected,» a source aware of the developments said.
Given that a proposal of this sort would require the approval of the Reserve Bank of India, HDFC Bank is in talks with the regulator on the matter, sources said.
Emails sent to the RBI and HDFC Bank seeking comment on the matter did not receive responses by the time of publication.
ET had reported last week that HDFC Bank is likely to soon issue infrastructure bonds worth around ₹10,000-15,000 crore.
«There are various ideas being floated around and this could be one of them. Nothing prevents a bank or company from buying back a bond. Having said that, any such proposal needs to be examined for legal and regulatory compliance before
