SBI drive to raise $1.5bn

Mumbai, June 29: The State Bank of India today said it would raise long-term capital of up to $1.5 billion (over Rs 10,000 crore) by issuing bonds in dollar or other convertible currencies.

The decision was taken by the executive committee of the bank today.

"The executive committee of the central board at its meeting held on June 29 approved to raise long-term funds up to $1,500 million in single/multiple tranches," the SBI said in a filing with the stock exchanges.

Though the lender did not elaborate on the purpose behind this exercise, it said the fund-raising would take place through a public offer or private placement of senior unsecured notes in US dollar or any other convertible currency during the current financial year.

The bank had twice made bond issues in February and March.

In March, the bank had raised Rs 500 crore through bonds. This came after a Rs 3,000-crore capital raising in February through bonds to fund business growth. This amount was raised through Basel III compliant tier-ll bonds in the nature of debentures. The bonds, with a 10-year maturity, gave 8.45 per cent interest annually to investors who subscribed to them on a private placement basis.

The bonds came with a call option of five years.

Earlier, the SBI had obtained the board's approval to raise Rs 15,000 crore through various means, including public offer and overseas issue of shares. The SBI had then said the funds raised would help the bank to meet the Basel III norms, which would kick in from March 2019.

It is estimated that public sector banks will need Rs 1.80 lakh crore to meet Basel III norms.

The shares of the SBI today finished at Rs 217.20, up 0.42 per cent, from the previous close of Rs 216.30 on the BSE.

State Bank of India