Punjab National Bank is likely to raise Rs 2,000 crore through the issuance of additional Tier 1 bonds this week, as the state-owned lender looks to raise capital amid firm credit growth.

The bank's bond issue issuance is likely to have a base size of Rs 500 crore and a greenshoe option of Rs 1,500 crore, market sources said, adding that the tender for the sale of bonds will be held on 21 March. The AT-1 call bonds are likely to have a call option after 5 years.

The securities are rated AA+ by Crisil and India Ratings, sources said.

With bank credit growth having persistently outstripped deposit growth for nearly two years, lenders face pressure to mobilize capital to finance strong loan demand.

The latest RBI data showed that as of February 23, bank credit growth stood at 16.5% year-on-year, while deposit growth stood at 12.5% during the same period. Credit and deposit numbers exclude the impact of the merger between HDFC and HDFC Bank.

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