SBI to raise ₹15,000 cr via Tier II bonds to replace maturing debt

A senior SBI executive said the bank has approval from the board of directors to raise up to Rs 20,000 crore through debt capital in Fy26.

State Bank of India – the country’s largest lender – plans to enter the debt capital market this financial year by issuing Tier-II bonds raising up to ₹15,000 crore to replace maturing paper and fresh issuance.

 

A senior SBI executive said 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 subject to market conditions, the executive added.

 

Tier-II bonds worth ₹6,000 crore are maturing in FY26.

 

SBI’s Tier-II capital stood at ₹78,092 crore at the end of March this year, according to the red herring prospectus for raising equity capital from institutional investors in July. SBI has raised ₹25,000 crore of equity capital through Qualified Institutional Placement (QIP). 

 

Its 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 2.0 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 (RBI) to avoid a situation wherein a bank becomes non-viable.

 

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 for the year ended March 2023, 2.35 per cent in March 2024 and 2.14 per cent in March 2025.