State Bank of India Raises Rs 5,000 Crore Through Successful Basel III Bonds Issuance

State Bank of India (SBI) announced on Wednesday that it successfully raised Rs 5,000 crore through its first issuance of Basel III-compliant Additional Tier 1 bonds for this financial year. These bonds have a perpetual tenor with a call option available after 10 years and on each anniversary thereafter. The coupon rate is set at 7.98 per cent, according to SBI's statement.

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The bond issue received an enthusiastic response from investors, with bids exceeding the base issue size of Rs 2,000 crore by more than 3.5 times. A total of 108 bids were submitted, showcasing participation from a wide range of qualified institutional investors. These included provident funds, pension funds, insurance companies, mutual funds, non-banking financial companies (NBFCs), and banks.

Investor Trust and Participation

SBI Chairman C S Setty highlighted the diverse participation and variety of bids as a testament to the trust investors have in India's largest bank. "The wider participation and heterogeneity of bids demonstrated the trust investors place in the country's largest bank," he stated. This strong investor confidence led SBI to accept Rs 5,000 crore at the annual coupon rate of 7.98 per cent.

The issuance is noteworthy as it allows SBI to diversify its funding sources and secure long-term non-equity regulatory capital. Basel III is an internationally agreed framework aimed at enhancing the regulation, supervision, and risk management within banks globally.

This strategic move by SBI not only strengthens its capital base but also reflects its commitment to adhering to global banking standards. The successful bond issuance underscores SBI's robust position in the financial market and its ability to attract substantial investor interest across various sectors.