State Bank of India intends to secure ₹20,000 crore through the issue of Additional Tier 1 and Tier 2 Bonds, targeting domestic investors.
In a strategic move to strengthen its capital base and meet long-term funding requirements, the State Bank of India (SBI) has received approval from its Central Board to raise up to ₹20,000 crore through bond issuances in the financial year 2026 (FY26). This announcement comes after a successful fundraising of ₹30,000 crore via three tranches of Long-Term Bonds in FY25, with the first two at 7.36% each and the third at 7.23%.
The bond issuances are part of SBI's plan to capitalise on the soft interest rate regime, which has been a result of the Monetary Policy Committee's 100 basis point cut in the repo rate. This favourable interest rate environment may allow the bank to mop up funds at more competitive rates compared to the preceding year.
The bond issuances will primarily consist of Basel III compliant instruments. These include Additional Tier 1 (AT1) bonds, Tier 2 bonds, and Long-term Infrastructure Bonds. The AT1 bonds are perpetual debt instruments, while Tier 2 bonds are subordinated debt instruments. The Long-term Infrastructure Bonds will be used for financing infrastructure and affordable housing projects.
However, the specific interest rates and exact issuance dates for each tranche or issue have not been disclosed as of now. It is worth noting that these bond issuances are subject to Government of India (GOI) approval wherever required.
Meanwhile, SBI has also announced its intention to issue bonus shares for the first time, a decision that is yet to be finalised on July 19. Separately, the bank issued Tier 2 Bonds of ₹7,500 crore at 7.42% in August 2024 and ₹7,500 crore at 7.33% in September 2024. Additionally, SBI issued AT 1 Bonds of ₹5,000 crore at 7.98% in October 2024 and launched a ₹25,000 crore Qualified Institutions Placement (QIP) with a floor price of ₹811.05.
These bond issuances are taking place in a soft interest rate regime, which has been beneficial for SBI's fundraising efforts. The bank had also raised ₹20,000 crore via AT 1 and 2 bond issuances last year.
In conclusion, SBI's bond issuance program aims to bolster its capital and funding for long-term infrastructure needs, consistent with regulatory capital requirements. Further details on the specific interest rates and issuance schedule for FY26 are expected to be announced as each tranche or issue is launched.
- The State Bank of India's (SBI) bond issuances, part of its strategy to capitalize on the current soft interest rate regime, will consist primarily of Basel III compliant instruments such as Additional Tier 1 (AT1) bonds, Tier 2 bonds, and Long-term Infrastructure Bonds.
- SBI's bond issuances are intended to strengthen its capital base and meet long-term funding requirements, with the aim of financing infrastructure and affordable housing projects.
- The specific interest rates and exact issuance dates for each tranche or issue have not been disclosed as of now, but these bond issuances are subject to Government of India (GOI) approval wherever required.
- SBI's bond issuance program is a part of its broader business strategy in the finance and banking sector, aligning with market trends and regulatory capital requirements for long-term investing in the business sector.
