SBI, other public sector banks hit Bond Street to raise Rs 20,000 crore by month-end

Several state banks, including the country’s largest lender, State Bank of India (OSE), they are likely to take advantage debt markets and raise close to ₹20,000 crore by the end of the month as lenders step up fundraising activities amid faster growth. credit growth that deposit growth.

SBI is likely to raise Rs 5,000-10,000 crore by issuing Tier 2 Bonuseswhile Bank of Baroda seeks to raise up to ₹5,000 crore by issuing 10-year bonds. Infrastructure bondsThe tender is likely to take place on August 26, debt capital market executives said.

Meanwhile, Canara Bank It is likely to raise up to ₹4,000 crore through issuance of additional tier-1 (AT-1) bonds, with bidding for the debt sale likely to take place on August 28. bond sale It is likely to have a base size of ₹2,000 crore and a call option worth ₹2,000 crore, while its AT-1 bonds will have a call option at the end of five years, executives said.

So far in FY25, SBI has raised Rs 20,000 crore through issuance of two tranches of infrastructure bonds. In June, Canara Bank raised ₹10,000 crore, also through issuance of infrastructure bonds, which give banks waivers from maintaining reserve requirements on the funds raised.

“One form of borrowing that has been talked about a lot more in July, and this month as well, is infrastructure bond issuances,” said Kanika Pasricha, senior economic adviser, Union Bank of India“Infrastructure bonds also offer a benefit to banks of waiver from CRR (cash reserve ratio) and SLR (statutory liquidity ratio). Even in their earnings results, many banks have talked about borrowing more or raising borrowing limits because this credit-deposit wedge has persisted since April 2022.” Bank credit growth has consistently outpaced deposit growth since April 2022 as loan demand picked up as the economy progressively reopened after restrictions imposed during the Covid-19 pandemic. As on July 26, bank credit growth was 15.1% year-on-year, while deposit growth was 11.0%, the Reserve Bank of India data showed. The data excludes the impact of the HDFC-HDFC Bank merger. SBI will also consider raising funds through Additional Level 1 Bonuses in the coming weeks, subject to government approval to raise funds through the instrument, people familiar with the matter said.