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SBI raises Rs 10,000 crore at a coupon of 7.36% in 15-year infra bonds

Several other state-owned lenders such as Canara Bank and Bank of India are also planning to raise funds through infrastructure bonds

SBI, state bank of india

Photo Credit: Ruby Sharma

Subrata Panda Mumbai

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Country’s largest lender State Bank of India (SBI) has raised Rs 10,000 crore at a coupon of 7.36 per cent through 15-year infrastructure bonds, the bank said in a statement on Wednesday.

This issuance marks SBI's sixth infrastructure bond offering (in how many months). With this latest issue, the total outstanding long-term bonds issued by the bank now stands at Rs 59,718 crore.

The issue attracted bids in excess of Rs 18,145 crore and was oversubscribed by around 3.6 times against the base issue size of Rs 5,000 crore, the bank said, adding that the issue received about 120 bids from investors, including provident funds, pension funds, insurance companies, mutual funds and corporate houses.

“…issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor,” SBI Chairman Dinesh Khara said.

Money raised through infrastructure bonds is advantageous for banks because it is exempt from regulatory reserve requirements such as the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). Unlike funds raised through deposits, where banks must maintain 4.5 per cent of the amount as CRR with the Reserve Bank of India (RBI) and invest approximately 18 per cent in securities to meet SLR obligations, infrastructure bond proceeds can be fully deployed for lending activities.

Several other state-owned lenders such as Canara Bank and Bank of India are also planning to raise funds through infrastructure bonds.

Meanwhile, another state-run lender Bank of Baroda (BoB) is planning to raise funds through a USD issuance. BoB has decided to issue $500 million standalone “REG S” bonds under Medium Term Notes (MTN) programme of $4 billion. The bank has invited applications for joint lead managers for the proposed international USD bond issuance.

Previously, in January, SBI had raised $600 million by issuing a five-year paper from a clutch of investors across the globe as part of its $10 billion medium-term note programme. Following this, a clutch of Non-Banking Finance Companies (NBFCs), including Shriram Finance, Muthoot Finance, Manappuram Finance, and Sammaan Capital (erstwhile Indiabulls Housing Finance), raised money through USD bonds.

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First Published: Jul 10 2024 | 6:07 PM IST

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