SBI to raise up to Rs 10,000 crore via infrastructure bonds in Q4 of FY23

UCO Bank mulls AT1 offering to raise Rs 1,000 cr

State Bank of India (SBI) is planning to raise up to Rs 10,000 crore via infrastructure bonds during the current quarter ending March 2023. 

The country’s largest lender may float a public offering of these bonds or place them privately, the bank said in a filing with the BSE.

In December 2022, it had raised Rs 10,000 crore through a maiden issue of 10-year infrastructure bonds carrying a coupon of 7.51 per cent.

According to JM Financial Services, in calendar year 2022, lenders raised Rs 27,600 crore through infrastructure bonds, up from Rs 19,196 crore in 2020.

Lenders who tapped this route include Bank of Baroda and ICICI Bank.

The infrastructure bonds are exempt from computation of net demand and time liabilities (NDTL). Therefore, they are not subject to cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements.

Apart from infrastructure projects, the money can also be used for loans to affordable housing ventures.

Infrastructure bonds are long-term, fully paid, redeemable and unsecured financial instruments. The minimum maturity period for these bonds is seven years. 

As for deployment of money from these bonds, SBI has said it has a pipeline of projects for which credit has been sanctioned.

SBI’s infrastructure loans book grew by 10.81 per cent year-on-year (YoY) to Rs 3.67 trillion as of September 2022. Of this, exposure to the power sector was Rs 1.95 trillion and that to roads was Rs 95,614 crore.

Meanwhile, Kolkata-based UCO Bank said it will raise capital aggregating up to Rs 1,000 crore in the form of additional tier-1 bonds. It will be in one or more tranches up to March 31, 2024.

The board of the bank has approved the proposal, the BSE was informed. 

Capital raising through additional tier-I bonds (AT1 bonds) and tier-II bonds almost doubled to Rs 82,370 crore in calendar year 2022 over 2021.

Banks raised just over Rs 30,000 crore through tier-I bonds in calendar year 2022. The figure was about Rs 28,000 crore in 2021, according to estimates by JM Financial.