State Bank of India (SBI), the country’s largest lender, will raise up to Rs.12,000 crore by issuing bonds that are Basel-III complaint. The funds will be raised in one or more tranches through private placement.
“The Committee of Directors’ has authorised the bank to raise up to Rs.12,000 crore by way of “issue of Basel-III compliant Tier-II bonds, at par, through private placement”,” the SBI informed the stock exchanges.
Basel-III capital regulations are being implemented in India with effect from April 1, 2013 in a phased manner.
Last year, the Reserve Bank of India tweaked the norms for raising funds via bonds in a move to make it easier for banks and also make it attractive for investors. The minimum maturity period of these bonds was reduced and banks were allowed to tap retail investors.
SBI’s capital adequacy ratio, as on end September, was 12.17 per cent as compared to regulatory mandate of nine per cent. Tier-I capital of SBI was at 9.9 per cent, leaving much room for raising Tier-II bonds.
Allahabad BankAllahabad Bank has already raised Rs.1,000 crore by issuing Tier-II bonds on a private placement basis.
