SBI, HDFC Bank to raise up to Rs10,000 crore through perpetual bonds

5 Sep 2022 , 09:34 AM

Bellwether lenders HDFC Bank and (SBI) intend to raise up to 10,000 crore together this week through sales of perpetual bonds, citing burgeoning credit demand in a recovering economy that is currently the fifth largest in the world.

The largest mass financier and the nation’s most valuable lender will be able to increase their respective capital adequacy ratios by up to 30 basis points each thanks to perpetual, or Additional Tier 1 (AT-1), bonds. This will give them more room to advance money to eager borrowers, both retail and institutional. 0.01% is one basis point.

The need for credit is increasing in India, which has recently surpassed the UK to take over as the fifth-largest economy in the world after growing by 13.5% in the three months ending in June. The demand for credit in India has already surpassed a three-year high, exceeding the banks’ rate of deposit growth through FY23 by a significant margin.

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