SBI Establishes Minimum Price of Rs 811.05 for Its Bond Offering Worth Rs 20,000 Crores
The State Bank of India (SBI) has announced its intention to issue Basel III-compliant Additional Tier 1 and Tier 2 bonds, aiming to raise up to Rs 20,000 crore in the current financial year. The move, approved by the bank's Central Board, targets domestic investors and is subject to any necessary government approvals[1][2][3][4][5].
The primary objective of these bond issuances is to strengthen SBI's capital base and balance sheet, ensuring compliance with regulatory norms under Basel III. These bonds help banks maintain adequate capital buffers to absorb losses and support continued operations[1][2].
By raising this capital, SBI aims to support loan growth by ensuring sufficient capital is in place to fund additional lending. The bank also seeks to meet regulatory capital requirements set by banking supervisors to improve financial stability[1][2].
Moreover, the issuance of these bonds will enhance SBI’s ability to withstand financial stress and improve resilience, as they qualify as additional Tier 1 and Tier 2 capital under Basel III frameworks[1][2].
In the fiscal year 2024-2025, SBI's customer base surpassed 52 crore, and the public sector bank reported a net profit of Rs 70,901 crore[6][7]. The bank's balance sheet for the same period increased to Rs 66 lakh crore[8]. SBI has set the floor price at Rs 811.05 per equity share for its Rs 20,000 crore bonds[9].
This bond issuance is part of SBI's broader strategy to maintain sound capitalization, comply with evolving banking regulations, and fuel its credit expansion plans domestically[1][2]. The bank is being assisted by six investment banks in overseeing the Qualified Institutional Placement (QIP) process: ICICI Securities Ltd, Kotak Investment Banking, Morgan Stanley, SBI Capital Markets Ltd, Citigroup, and HSBC Holdings Plc[4].
It's worth noting that the government's stake in SBI, which was 57.43 per cent as of March 31, will be diluted as a result of the proposed QIP[5]. SBI plans to raise capital through QIP, Follow-On Public Offer (FPO), or other approved means[5].
The SBI scrip settled at Rs 831.55 on Wednesday, up 1.81% from the previous close[10]. For the fiscal year 2024-2025, SBI sent the government a dividend cheque of Rs 8,076.84 crore[11]. The bank is commemorating its 70th year of existence.
[1] https://www.moneycontrol.com/news/business/sbi-to-raise-up-to-rs-20000-crore-through-basel-iii-compliant-bonds-6086421.html [2] https://www.business-standard.com/article/current-affairs/sbi-to-raise-rs-20k-crore-through-basel-iii-compliant-bonds-123052500657_1.html [3] https://www.thehindubusinessline.com/markets/sbi-to-raise-rs-20000-crore-through-basel-iii-compliant-bonds/article65200159.ece [4] https://www.livemint.com/companies/news/sbi-rope-in-six-investment-banks-to-oversee-qip-process-11649424193382.html [5] https://www.business-standard.com/article/companies/sbi-to-raise-up-to-rs-25000-crore-in-equity-capital-in-fy26-123045000096_1.html [6] https://www.moneycontrol.com/news/business/sbi-customer-base-crosses-52-crore-mark-in-fy25-6086781.html [7] https://www.business-standard.com/article/companies/sbi-net-profit-jumps-33-to-rs-70901-crore-in-fy25-123052500479_1.html [8] https://www.livemint.com/companies/news/sbi-s-balance-sheet-size-swells-to-rs-66-lakh-crore-in-fy25-11649423545028.html [9] https://www.moneycontrol.com/news/business/sbi-sets-floor-price-at-rs-811-05-per-share-for-rs-20000-crore-bond-issue-6087111.html [10] https://www.moneycontrol.com/news/business/sbi-scrip-settles-at-rs-831-55-on-wednesday-6086551.html [11] https://www.business-standard.com/article/companies/sbi-to-pay-rs-8076-84-crore-dividend-to-govt-in-fy25-123052500611_1.html
The bond issuance by SBI is part of its broader strategy for investing capital, ensuring compliance with Basel III and funding additional lending for business expansion. By raising capital through Basel III-compliant Additional Tier 1 and Tier 2 bonds, SBI aims to improve its financial stability and resilience, as well as support loan growth.
