Bank of Baroda is a large public-sector bank, so its bonds are often seen as relatively safe. But not every Bank of Baroda bond is equally safe. A senior bond is different from a Tier 2 or AT1 bond, even if they come from the same bank. The higher return on some bonds is usually payment for taking on extra risk.
Bank of Baroda bonds come in different types: senior infrastructure bonds, Tier 2 bonds, and AT1 bonds. Each offers a different mix of return, safety, and risk.
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Old Bank of Baroda Bonds and Unclaimed Money
If you hold an older Bank of Baroda bond, first check whether it is held in demat form or as a physical certificate. Also make sure your registered bank account, mobile number, and email are up to date.
For demat holdings, interest and repayment amounts are usually sent directly to your registered bank account. So, keeping those details updated is the first step. If you have a physical certificate, contact the registrar or Bank of Baroda’s investor-support team with the certificate and your ID documents. If the certificate is lost, ask the registrar what documents and process it requires for a duplicate certificate.
If interest or repayment money remains unclaimed for seven years, it may be moved to the Investor Education and Protection Fund, or IEPF. Bank of Baroda publishes a list of unclaimed bond amounts, including money still waiting to be transferred and money already moved to the IEPF. Investors can claim this money by filing Form IEPF-5 on the IEPF website. For physical bonds, the original certificate and identity documents are usually needed.
Bank of Baroda Bond Types at a Glance
| Instrument | Issuer | Indicative yield/coupon | Rating | Main thing to know |
| Senior infrastructure bonds | Bank of Baroda | 7.26% coupon on the 2034 bond; market yield changes daily | CRISIL AAA/Stable | Simplest and safest of the three; no PONV write-down risk. nseindia+1 |
| Tier 2 bonds | Bank of Baroda | Examples: 7.75% to 2034; 7.84% to 2035 | CARE AAA/Stable | Paid after senior bondholders; PONV write-down risk. |
| AT1 bonds | Bank of Baroda | Example: 8.25% coupon on the perpetual 2020 bond | AA+ (ICRA/CRISIL) | No fixed maturity; interest can be skipped; highest write-down risk. |
The Modern Bank of Baroda Debt Spectrum
Bank of Baroda’s current bonds fall into three broad groups:
- Senior infrastructure bonds: The simplest and usually safest type.
- Tier 2 bonds: These rank below senior bonds if the bank runs into serious trouble.
- AT1 bonds: These are the riskiest type and can be written down if the bank becomes non-viable.
Recent ratings show this difference. CARE rates Bank of Baroda’s Tier 2 bonds AAA (Stable), while ICRA rates its AT1 bonds AA+ (Stable). In simple terms, AAA is a higher safety rating than AA+.
Bank of Baroda Senior Infrastructure Bonds
Senior infrastructure bonds are regular bank bonds. They sit ahead of Tier 2 and AT1 bonds if the bank is wound up. They also do not have the special “write-down” rule that applies to AT1 bonds. Like other bank infrastructure bonds, they must have a minimum maturity of seven years under RBI rules.
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One example is Bank of Baroda’s 7.26% bond, ISIN INE028A08356. It was issued on 9 September 2024 and matures on 9 September 2034. It has a face value of ₹1 lakh, pays interest once a year, and carries a CRISIL AAA/Stable rating.
If you buy this bond in the market today, do not look only at the 7.26% coupon. Check the yield; the return you will actually earn if you buy at today’s price and hold it until maturity.
Bank of Baroda Tier 2 Bonds
Tier 2 bonds are subordinated bonds. In simple words, if the bank is wound up, senior bondholders and depositors are paid before Tier 2 bondholders.
These bonds also have a Point of Non-Viability (PONV) rule. If the RBI decides that the bank cannot survive without emergency support, Tier 2 bonds can be written down or converted into shares. This is a rare but serious risk.
CARE rates Bank of Baroda’s Tier 2 bonds AAA (Stable). Examples include a 7.75% bond maturing in 2034 and a 7.84% bond maturing in 2035. A high rating is reassuring, but it does not remove the extra risks of Tier 2 bonds. Always check the details of the exact bond you are buying.
Bank of Baroda AT1 Bonds and the PONV Walkthrough
AT1 bonds are the most complicated type of bank bond. They are also called Additional Tier 1 bonds. Unlike normal bonds, they do not have a fixed maturity date.
- No fixed end date: AT1 bonds are perpetual, meaning they do not have a fixed maturity date. The bank may have a call option to repay them early, but if it does not, investors usually have to sell in the market to exit.
- Interest can be skipped: The bank can choose not to pay interest in some situations without this being called a default.
- Write-down risk: If the RBI says the bank is not viable, AT1 bonds can be written down fully or partly, or converted into shares. This can happen before senior bondholders and Tier 2 bondholders face losses.
- Lower rating: ICRA rates Bank of Baroda’s AT1 bonds AA+ (Stable), and CRISIL has also rated the bank’s AT1 paper AA+/Stable. This is lower than the AAA rating on its senior infrastructure bonds.
- Limited access: Since SEBI’s 2020 rules, individual and HNI investors generally cannot buy new AT1 bonds directly. They can usually buy them only in the secondary market, often in large quantities.
For example, Bank of Baroda’s 8.25% AT1 bond, ISIN INE028A08216, was issued in July 2020 with a call date of 17 July 2025. The bank exercised that call and redeemed the bond on 17 July 2025. This shows why AT1 investors should track call dates: the bond may be repaid early, or it may remain outstanding indefinitely if it is not called.
How to Buy and Tax
You can buy listed Bank of Baroda bonds through a broking platform in the secondary market. You can also apply when the bank launches a new bond issue, though such opportunities are not always available.
You can also compare similar options and browse AAA-rated bank and NBFC NCDs on GoldenPi and check the coupon, tenure, and rating side by side before you invest.
Interest earned from bonds is usually taxed at your income-tax slab rate. If you sell a bond before maturity, the tax on any gain depends on how long you held it and the tax rules at the time of sale. Before buying, check the bond’s ISIN, face value, interest payment frequency, maturity date, call date, rating, and how easily it can be sold in the market.
Which Bank of Baroda Bond Fits?
If your main goal is safety and getting your principal back on a fixed date, senior AAA infrastructure bonds are usually the clearer choice. If you understand and accept the extra risk, Tier 2 bonds may offer a higher return. AT1 bonds are suitable only for investors who fully understand that they are perpetual and can face write-downs.
Bank of Baroda FAQs
The main categories include:
– Infrastructure bonds: Issued under the applicable infrastructure-bond framework.
– Tier II bonds: Regulatory capital instruments with defined maturity terms.
– AT1 bonds: Generally perpetual capital instruments with special loss-absorption features.
The Government of India is the bank’s majority shareholder, and rating agencies factor expected government support into their assessments. However, an investment in a BoB bond is not automatically a sovereign-guaranteed investment. Check whether the specific instrument carries an explicit guarantee.
Interest is generally taxable under the applicable income-tax rules. The precise treatment depends on the investor’s circumstances, instrument, and relevant tax year. Any TDS deducted is not necessarily the final tax liability.
Yes. Selling a bond for more than its tax cost may result in a capital gain, while selling below cost may result in a loss. The tax treatment depends on the instrument, acquisition and sale dates, holding period, and applicable law.
Identify the bond’s ISIN and check its latest available price, accrued interest, coupon schedule, and maturity date. Use those details to assess yield to maturity (YTM). If the bond has little recent trading activity, the available price and yield estimate may be less reliable.
Disclaimer
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
