SBI may raise Rs 10,000 crore via sale of infra bonds

20 Jul 2023 , 11:04 AM

The country’s largest lender, State Bank of India (SBI), is expected to sell infrastructure bonds worth up to Rs 10,000 crore by the end of this month, as it attempts to raise long-term capital amid solid credit demand.

Reportedly, the bank is planning to issue 15-year infrastructure bonds with a base value of Rs 5,000 crore and a green shoe option of Rs 5,000 crore.

SBI issued 15-year infrastructure bonds in January, marking the first time an Indian bank had sold such notes in that maturity range.

As the largest participant in the banking sector, the bank believes that more 15-year infrastructure issuances will promote more fund-raising in the longer-maturity segment, resulting in greater price discovery for infrastructure finance.

Infrastructure bonds are long-term securities with at least a seven-year maturity. Banks are not required to maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) on these instruments as they are used to provide funding to the infrastructure sector, according to Reserve Bank of India guidelines.

The CRR is currently 4.5% of net demand and time liabilities, a proxy for deposits. The SLR is currently at 18%.

At around 11.01 AM, SBI was trading 0.58% higher at Rs 604.95, against the previous close of Rs 601.45 on NSE. The counter touched an intraday high and low of Rs 607.50 and Rs 589.75, respectively.

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