New Delhi: India’s largest lender State Bank of India (SBI) on June 9 announced to raise Rs 50,000 crore during FY23 by issuing debt instruments from Indian as well as overseas markets.
SBI, in its stock exchange filing, said the decision was taken by the central board of the bank.
Why SBI needs to raise such huge funds?
State Bank of India plans to raise funds as the demand for loans has exceeded the growth in deposits. The demand for bank loans is still in double digits, despite a rise of 2.5 per cent in interest rates since May a year back.
The country’s largest public lender will be gathering funds in rupee or any other convertible currency by issuing debt instruments along with long-term bonds, Basel III – compliant Additional Tier-1 (AT-1) bonds and Tier-2 bonds, stated the bank in its exchange filing.
Bank’s loan growth
State Bank of India’s loans saw a hike by 16 per cent on-year in Q4 in comparison to 9.19 per cent growth in deposits. However, the lender anticipated a further rise in loans, which will be around 12-14 per cent in fiscal 2024.
In April, SBI raised $ 750 million through five-year dollar-dominated bonds at a semi-annual discount rate of 4.8750 per cent via its London branch.
Meanwhile in March, the lender in India itself raised 37.17 billion rupees through BASEL III- compliant AT- 1 consol bonds at a discount rate of 8.25 per cent.
SBI’s financial numbers
The previous month, the public lender reported a jump above 83 per cent in March quarter profit due to a decline in bad debt provisions and healthy credit growth.