SBI to raise Rs 8,931 cr by issuing Basel III compliant bonds

The country's largest lender SBI on Friday said its board has approved a proposal to raise Rs 8,931 crore by issuing Basel III compliant bonds to investors.

The committee of directors for capital raising at its meeting held today accorded its approval to allot 89,310 Basel III compliant non-convertible, taxable, redeemable, subordinated, unsecured, fully paid-up debt instruments aggregating to Rs 8,931 crore to bond subscribers on August 21, 2020, SBI said in a regulatory filing.

The bonds in the nature of debentures qualifying as tier 2 capital of the bank have face value of Rs 10 lakh, bearing a coupon of 6.80 per cent payable annually for a tenor of 15 years.

State Bank of India said the bonds come with a call option after 10 years or any anniversary date thereafter to bond subscribers.

Call option means the issuer of the bonds can call back the bonds before the maturity date by paying back the principal amount to investors.

Under Basel-III Capital Regulations, banks need to improve and strengthen their capital planning processes.

Basel III norms are being implemented in phases since 2013 by the domestic banks to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.

Shares of SBI closed at Rs 198.35 apiece on BSE, up 1.87 per cent from previous close.