In FY23, SBI plans to raise up to Rs 11,000 Crore
The plan calls for raising up to 7,000 crore in extra tier 1 (AT-1) capital, with the Government of India’s approval; the remaining Rs 4,000 crore would be in the form of new tier 2 capital.
The State Bank of India (SBI), the largest lender in India, announced on Wednesday that its board had authorised raising up to $11,000 crore in bonds for the current fiscal year.
“The central board of the bank at its meeting held today accorded approval for raising capital by way of issuance of Basel III-compliant debt instrument in dollar/rupee and/or any other convertible currency, during FY23…” it said in a regulatory filing.
The strategy calls for raising up to 7,000 crore in extra tier 1 (AT-1) capital, with the remaining 4,000 crore coming from new tier 2 capital, pending approval from the Indian government.
SBI had a total capital adequacy ratio of 13.83 percent at the end of March, with tier 2 at 2.41 percent and AT-1 at 1.48 percent.
Public sector banks are projected to raise significantly more money this fiscal year in order to finance credit growth and replace bonds that are due this year, according to a study published on Wednesday by Mint. Canara Bank raised the same amount of money as Punjab National Bank this month, but at a lower interest rate of 8.24 percent. Punjab National Bank was the first to enter the market, raising 2,000 crore through AT-1 bonds at 8.75 percent.
AT-1 bonds, often known as perpetual bonds, have a five-year call option but no fixed maturity date. These are issued by banks in compliance with Basel III standards to increase their core equity basis.