State Bank of India raises Rs 7,000 cr via Basel III compliant bonds

The country's largest lender State Bank of India on Monday said it has raised Rs 7,000 crore by issuing Basel III compliant bonds.

"The Committee of Directors for Capital Raising at its meeting of held today on September 21, 2020 accorded its approval to allot 70,000 Basel III compliant non-convertible, taxable, redeemable...debt instruments in the nature of debentures aggregating to Rs 7,000 crore, to bond subscribers," SBI said in a regulatory filing.

The allotment of bonds to the subscribers took place on the same date i.e. September 21, 2020, it added.

The bonds qualify as tier II capital of the bank, and has face value of Rs 10 lakh each, bearing coupon rate of 6.24 per cent per annum payable annually for a tenor of 10 years, it said.

There is call option after 5 years and on anniversary thereafter, it added.

Call option means the issuer of the bonds can call back the bonds before the maturity date by paying back the principal amount to investors.

A month back, SBI had raised Rs 8,931 crore by allotting 89,310 Basel III-compliant debt instruments to bond subscribers.

Under the globally accepted Basel-III capital regulations, banks need to improve and strengthen their capital planning processes.

Basel III norms are being implemented in phases since 2013 by Indian banks to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. The banks have to comply with these regulations by end of September 2020.

SBI stock closed at Rs 185.80 apiece on BSE, down 3.53 per cent from previous close.