SBI is likely to raise ₹5,000 crore-10,000 crore through the issuance of tier-2 bonds, while Bank of Baroda is looking to raise up to ₹5,000 crore through the issuance of 10-year infrastructure bonds, with bidding likely on August 26, said debt capital market executives.
Meanwhile, Canara Bank is likely to raise up to ₹4,000 crore through the issuance of additional tier-1 (AT-1) bonds, with bidding for the debt sale likely on August 28. Canara Bank’s bond sale is likely to have a base size of ₹2,000 crore and a greenshoe option worth ₹2,000 crore, while its AT-1 bonds will have a call option at the end of five years, the executives said.
So far, in FY25, SBI has raised ₹20,000 crore through the issuance of two tranches of infrastructure bonds. In June, Canara Bank raised ₹10,000 crore, also through the issuance of infrastructure bonds, which give banks exemptions from maintenance of reserve requirements on the funds raised.
“One form of borrowing that has been talked about a lot more in the month of July, and this month as well, is infrastructure bond issuances,” said Kanika Pasricha, chief economic advisor, Union Bank of India. “Infrastructure bonds also offer a benefit to banks of exemption from CRR (cash reserve ratio) and SLR (statutory liquidity ratio). Even in their earnings results, many banks have talked about borrowing further or raising borrowing limits because there has been persistence of this credit-deposit wedge since April 2022.”Bank credit growth has steadily outstripped deposit growth since April 2022 as demand for loans increased as the economy progressively reopened after the restrictions imposed during the Covid-19 pandemic. As of July 26, bank credit growth was 15.1% year-on-year, while deposit growth was 11.0%, Reserve Bank of India data showed. The data exclude the impact of the HDFC-HDFC Bank merger.SBI will also consider raising funds through additional tier-1 bonds in the coming weeks, subject to approval from the government for raising funds through the instrument, said people in the know.