Bank of Maharashtra, which raised Rs 290 crore by issuing Basel III compliant additional tier 1 (AT1) bonds on Wednesday, is looking to grow its credit by 16% and deposit by 10-12% in the next financial year.

The state-run bank expects to close the current financial year with a credit growth of 20% and deposit increase of 14%.

“We plan to grow our credit by 16% in FY23. Deposits should grow by 10-12%,” said Bank of Maharashtra managing director and chief executive officer AS Rajeev.

 The bonds are issued at a coupon rate of 8.75% and include green shoe option of Rs 40 crore.

“Our capital adequacy ratio is comfortable at 15% so this capital is not for this financial year. Since the markets were favourable, we raised the money. We will use the capital to fund our growth next year,” said Rajeev.

The issue garnered overwhelming response from investors with bids of Rs 1,055 crore received against a base issue size of Rs 250 crore.

The bank is planning to open 150 branches in FY23 as part of its strategy to expand its pan India footprint, with five of them in Jammu and Kashmir.

The AT1 instrument is perpetual in nature with call option after five years, the lender said. As perpetual bonds carry no maturity date, they may be treated as equity and not as debt.

The bank has credit ratings of AA (Stable) for AT1 Bonds from Acuite & Infomerics credit agencies.