SBI sets Sep 5 as record date to exercise call option on Tier-II bonds

The bank has approval from the board of directors to raise up to Rs.20,000 crore through debt capital in 2025-2026 (FY26)

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The State Bank of India (SBI) has set September 5, 2025, as the record date to determine eligible bondholders as it exercises the call option on its 6.24 per cent Tier-II bonds, issued on September 21, 2020, for ₹7,000 crore, and originally scheduled to mature in September 2030. The bank will redeem the bonds on September 20, 2025, adjusted for a holiday.

 

The bank has approval from the board of directors to raise up to ₹20,000 crore through debt capital in 2025-2026 (FY26). Out of this, additional Tier-I (AT1) is about ₹5,000 crore and Tier-II is about ₹15,000 crore. The timing and coupon rate would be subjected to market conditions.

 

SBI’s Tier-II capital base in percentage terms has seen moderation in the past three years with a ratio at 2.62 per cent till March 2023, 2.35 per cent in March 2024 and 2.14 per cent in March 2025.

 

The lender’s capital adequacy ratio (CAR) stood at 14.63 per cent with common equity Tier-I of 11.1 per cent, additional Tier-I of 1.35 per cent, and Tier-II at 2.18 per cent at end of June. With the recent equity capital raise of ₹25,000 crore from institutional investors, the capital adequacy ratio will increase to 15.33 per cent.

 

The capital requirements under Basel-III guidelines for banks in India indicate a minimum Tier-II level of 2 per cent in total CAR. The Tier-II instruments issued under Basel-III norms can be written down at the point of non-viability (PONV).

 

According to rating agency Crisil Ratings, the PONV trigger is a remote possibility in the Indian context. A robust regulatory and supervisory framework and the systemic importance of the banking sector are expected to ensure adequate and timely intervention by the Reserve Bank of India to avoid a situation where a bank becomes non-viable.