Union Bank Raises ₹7,500 Crore Via 10-Year Bonds for Infrastructure and Housing

Union Bank of India has successfully raised ₹7,500 crore through unsecured Non-Convertible Bonds with a 10-year term and a 7.16% coupon rate. The issuance, rated AAA/Stable, is intended to finance critical infrastructure and affordable housing projects.

The Bond Issuance Details

Union Bank of India has completed a ₹7,500 crore bond issuance. The funds were raised via long-term, unsecured Non-Convertible Bonds. These bonds carry a 7.16% coupon rate for a 10-year term. The issuance included a base amount of ₹3,000 crore with an option to issue an additional ₹4,500 crore. CARE and ICRA have rated these bonds AAA/Stable, signifying strong creditworthiness.

Why This Matters

This capital infusion strengthens Union Bank's funding base, crucial for supporting key growth sectors like infrastructure and affordable housing. It aligns with national development goals and diversifies the bank's funding sources, reducing reliance on traditional deposits.

Background

Union Bank's board had previously approved raising up to ₹20,000 crore in long-term bonds in March 2026 for similar purposes. This ₹7,500 crore issuance is part of that larger plan, executed before the financial year ended. Public sector banks commonly issue bonds to raise long-term funds for lending activities. Earlier in February 2024, the bank had raised ₹3,000 crore through an issuance to institutional investors.

Impact and Outlook

Shareholders can anticipate enhanced capital adequacy, which supports increased lending capacity. The bank's ability to finance large-scale infrastructure and housing projects is now bolstered. Diversified funding may also lead to a more stable cost of funds over the long term.

Risks to Watch

Recent net interest margins (profitability on lending) have shown pressure, which could impact profitability from new lending. The bank's net profit for Q2 FY26 declined, though asset quality improved. Execution risks for the infrastructure and housing projects funded by these bonds also remain a factor.

Peer Comparison

Other public sector banks are also active in the bond market. For instance, State Bank of India raised ₹7,500 crore through 10-year Tier 2 bonds in October 2025. Bank of Baroda and Canara Bank are among other public sector banks that regularly raise funds via bond markets.

Key Financial Metrics

As of Q2 FY26:

• Union Bank's Gross Non-Performing Assets (NPA) stood at 3.29%, a notable improvement.
• Net NPA was reported at 0.55%, reflecting effective recovery efforts.
• Net Profit for the quarter was ₹4,249 crore, with Net Interest Income at ₹8,812 crore.
• The bank maintained strong capital adequacy ratios, including a CAR of 17.07% and a CET1 ratio of 14.37%.

Looking Ahead

Investors will track the official listing of these bonds on stock exchanges. The bank's progress in deploying these funds into infrastructure and affordable housing projects will also be key. Further updates on the remaining ₹20,000 crore fundraising plan and trends in net interest margins will be watched.