The State Bank of India (SBI), the country’s largest lender, has successfully raised Rs 10,000 crore through 15-year infrastructure bonds at a coupon rate of 7.36 percent, the bank announced on Wednesday. This marks SBI’s sixth infrastructure bond issuance in recent months.
The latest issue brings SBI’s total outstanding long-term bonds to Rs 59,718 crore. The bond issue attracted bids exceeding Rs 18,145 crore, oversubscribing by approximately 3.6 times against the base issue size of Rs 5,000 crore. Around 120 bids were received from various investors, including provident funds, pension funds, insurance companies, mutual funds, and corporate houses.
SBI Chairman Dinesh Khara commented, “This issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.”
Infrastructure bonds are advantageous for banks as they are exempt from regulatory reserve requirements like the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). Unlike deposits, where banks must maintain 4.5 percent of the amount as CRR with the Reserve Bank of India (RBI) and invest approximately 18 percent in securities to meet SLR obligations, funds raised through infrastructure bonds can be fully deployed for lending activities.
Other state-owned banks, including Canara Bank and Bank of India, are also planning to raise funds through infrastructure bonds. Additionally, Bank of Baroda (BoB) is planning to raise $500 million through standalone “REG S” bonds under its $4 billion Medium Term Notes (MTN) programme. Earlier this year, SBI raised $600 million through a five-year paper as part of its $10 billion MTN programme. Non-Banking Finance Companies (NBFCs) such as Shriram Finance, Muthoot Finance, Manappuram Finance, and Sammaan Capital have also raised funds through USD bonds.
This strategic move by SBI and other financial institutions underscores the growing importance of infrastructure bonds in India’s financial ecosystem.
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SBI Raises Rs 10,000 Crore
News Desk
