SBI raises Rs 2,500 tier-II bonds

The State Bank of India (SBI), the country's largest lender, has raised about Rs 2,500 crore capital through upper tier- II bonds to support the business growth and meet the Basel II capital adequacy norms.

This is the largest capital raising ever though upper tier II bonds in domestic market. The initial plan was to float bonds for Rs 2,000 crore. Looking at the response to the issue, the bank has decided to retain entire amount pledged, senior SBI official said.

The 15-year bonds carry a coupon rate of 10.20 per cent payable annually. The interest rate for the long term paper is expected to hover in 9.75 per cent to 10.25 per cent range.

"We plan to raise about Rs 12,000 crore in capital in 2007-08. this includes bond offering to support business growth," another SBI official said.

THe bank's capital adequacy at the end of March 31, 2007 stood at 12.34 per cent, 46 basis points higher than CAR at the end of March 2007. The bank plans to comply with the Basel II norms by September 2007, six months before the RBI requirement.