SBI Taps Market with ₹75 Billion Tier-2 Bond at 6.93%, Draws Strong Demand

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State Bank of India has successfully raised ₹75 billion through Basel III-compliant Tier-2 bonds at a 6.93% coupon rate. The fundraising move aims to bolster the bank’s capital adequacy and support credit expansion, reflecting investor confidence in India’s largest lender amid steady economic and banking sector growth.

SBI Fortifies Capital Position with Tier-2 Bond Issue

India’s largest public sector lender, State Bank of India (SBI), announced a successful capital raise of ₹75 billion through its latest tranche of Basel III-compliant Tier-2 bonds. The bonds, carrying a coupon rate of 6.93%, garnered significant investor interest, underlining solid confidence in SBI’s stability and performance outlook.

The issuance is part of SBI’s broader strategy to strengthen its capital structure in alignment with regulatory requirements and to sustain lending growth across retail, corporate, and infrastructure segments. The proceeds from the bond issue are expected to augment the bank’s Tier-2 capital, ensuring compliance with the Reserve Bank of India’s Basel III framework.

Notable Updates

Issue Details: The ₹75 billion bond sale was executed under the Basel III framework, designed to enhance resilience within the banking system.

Coupon Rate: The bonds were priced at an attractive 6.93%, indicating favorable borrowing conditions for the bank amid an environment of stable interest rates.

Investor Response: Strong demand from institutional participants such as mutual funds, pension funds, and insurance companies highlighted the market’s trust in SBI’s credit quality and operational performance.

Capital Adequacy Focus: The issuance will strengthen the bank’s overall Capital to Risk-weighted Assets Ratio (CRAR), supporting its future growth and risk absorption capacity.

Broader Strategy: SBI continues to maintain a balanced approach toward raising hybrid instruments, managing capital efficiently while optimizing cost of funds.

Major Takeaways

Enhanced lending capacity: The additional capital will enable SBI to expand its credit book, particularly in infrastructure and MSME segments.

Compliance reinforcement: The transaction ensures continued alignment with Basel III norms, maintaining RBI’s required capital buffers.

Market confidence: Strong subscription levels reaffirm SBI’s position as a benchmark issuer in India’s bond market.

Cost-efficient funding: The relatively low coupon reflects SBI’s robust credit profile and favorable market reputation.

SBI’s latest capital infusion reinforces its financial strength and long-term growth vision as it continues to serve as a key driver of credit liquidity in India’s banking ecosystem.

Source: Company filing, BSE announcement, and regulatory disclosure.