Kotak Mahindra Bank, a private-sector lender, has collected Rs 1,895 crore through seven-year infrastructure bonds for lending in sectors including as power, highways, and housing.

The bond coupon was set at 7.55 percent. The offering consisted of two parts: a basic size of Rs 1,250 crore and a greenshoe option to retain further Rs 1,250 crore. The bank said in a statement that while the issue received bids totaling Rs 3,605 crore, it accepted Rs 1,895 crore at 7.55 percent.

CRISIL has assigned these bonds a "AAA/Stable" rating. The board of directors has approved the issuance of bonds in an amount not exceeding Rs 7,000 crore. Infrastructure bonds are long-term investments with a minimum maturity of seven years.

Bond market dealers claimed the bank received a better price for its bond because the yield on government bonds had risen by 7-8 basis points in the previous seven days. The majority of investors were insurance firms and other organisations.

Banks raised Rs 19,900 crore through infrastructure bonds in FY23, down from approximately Rs 27,200 crore in FY22. According to JM Financial Services statistics, the banks that used infrastructure bonds the most were SBI (Rs 10,000 crore) and ICICI Bank (Rs 7,100 crore).