SBI to raise up to Rs 14,000 cr via AT1 bonds to boost capital adequacy

The country's largest bank, State Bank of India, plans to raise upto Rs 14,000 crore through additional tier-I bonds (AT1 bonds) in current financial year (FY22) to enhance capital adequacy profile.

The Central Board approved the capital raise by way of issuance of Basel lll-compliant debt instruments in rupee and/or US dollar in FY22, bank said in a BSE filing. Its stock closed 1.64 per cent higher at Rs 419.55 per share on BSE.

An SBI executive said this is an enabling provision and the actual issuance will depend on the market conditions and credit growth in the system.

The fundraising is subject to concurrence with the Government of India, its promoter, which held 57.63 per cent stake on March 31, 2021.

Its capital adequacy ratio (CAR) stood at 13.74 per cent as of March end 2021, up from 13.06 per cent in March 2020. Its Common Equity Tier I (CETI) was 10.02 per cent in March 2021 higher than regulatory requirement of 7.97 per cent. Its AT-1 level was 1.42 per cent in March 2021, up from 1.23 per cent in March 2020.

Being a systemically important financial institution, the bank has to maintain a higher level of CAR than its peers.

With CETI level higher than regulatory requirements, SBI is not looking at raising equity capital for now. Besides retained earnings, the bank has an option to monetize stake in subsidiaries like general insurance and asset management unit through their listing to raise resources.

As and when external capital is required, it would approach the board and shareholders for requisite approvals to raise resources from the market.