ICICI Bank Raises ₹3,945 Crore via Tier 2 Bonds at 7.40% Coupon

ICICI Bank has issued ₹39,450 million (₹3,945 crore) worth of unsecured, subordinated Tier 2 Basel III bonds, strengthening its capital position ahead of future credit growth. The issue consists of 3,945 bonds of ₹10 million each, placed privately on 28 November 2025. These bonds carry a 15-year maturity with a call option after 10 years, allowing the bank to redeem early if market conditions turn favourable. The coupon is 7.40% per annum, making it an attractive instrument for long-term debt investors. The bond has been rated CARE AAA; Stable and ICRA AAA (Stable), reflecting strong financial stability. The bonds are listed on the NSE and come with Basel III-mandated loss-absorbency and PONV (Point of Non-Viability) write-down provisions. For ICICI Bank, Tier 2 issuance boosts its overall capital adequacy, giving it more room to expand lending. With rising demand for retail and corporate credit, Indian banks have been strengthening their capital buffers to support balance-sheet growth. The strong demand for high-rated bank bonds has also kept borrowing costs reasonable. Investors should note that subordinated Tier 2 instruments come with higher risk than senior debt due to loss-absorption triggers, but offer better yields in return. The call option structure also means the effective duration may be shorter than 15 years if redeemed early. Learning Outcome: This post explains how Tier 2 bond issuances help banks strengthen capital ratios under Basel III norms, why call-option structures matter to investors, and how credit ratings and coupon levels indicate market confidence in a bank’s long-term stability.