SBI Raises ₹4,691 Cr Via AT1 Bonds for Growth

State Bank of India (SBI), India’s largest lender, successfully raised ₹4,691 crore on Wednesday through its inaugural Additional Tier-1 (AT-1) bond issue for the current financial year. These Basel III compliant bonds carry a five-year call option and offer a coupon rate of 7.75%.

The issuance garnered significant investor interest, with bids exceeding twice the base issue size of ₹3,000 crore. A total of 89 bids were received from a diverse group of qualified institutional bidders.

Understanding AT-1 Bonds and Capital

Additional Tier-1 (AT-1) bonds are a crucial component of banks’ regulatory capital, designed to absorb losses while allowing banks to meet Basel III norms. This fundraising initiative aligns with SBI’s board-approved plan from June 18 to raise up to ₹60,000 crore during FY27 through various debt instruments.

SBI Chairman CS Setty emphasized that this issuance is vital for the bank. He stated it helps “diversify its funding sources and secure long-term non-equity regulatory capital.”

Key Numbers from SBI’s Financial Position

• Amount Raised (Current AT-1): ₹4,691 crore
• Coupon Rate: 7.75%
• FY27 Fundraising Target: Up to ₹60,000 crore (via debt)
• FY26 Domestic Bond Issuances: ₹18,500 crore
• Capital-to-Risk Weighted Assets Ratio (CRAR) as of March 31: 15.40%
• Common Equity Tier-I (CET-1) Ratio as of March 31: 12.29%
• Overall Tier-I Ratio as of March 31: 13.33%

Banks frequently tap debt markets to fulfill regulatory capital requirements under Basel III norms, finance credit expansion, and broaden their funding base. Both AT-1 and Tier-II bonds form integral parts of this strategy.

Expanding Funding and Credit Growth

SBI maintains an active presence in the domestic bond market, regularly issuing infrastructure bonds and other capital instruments to support balance-sheet growth. This activity occurs amid robust credit demand across the economy.

In a related strategic move, SBI announced on May 12 its decision to raise up to $2 billion through overseas bond issuances in FY27. This aims to further diversify its funding base and enhance access to global investors.

• Gross Advances (March Quarter): Increased 17% year-on-year to ₹49.32 trillion
• Deposits (March Quarter): Rose 11% to ₹59.75 trillion
• FY27 Credit-Growth Guidance: 13-15%
• Banking System Credit Growth Forecast (FY27): 13-14%
• Banking System Deposit Growth Forecast (FY27): 11-12%

Chairman Setty also highlighted strong asset quality within the banking sector. He cautioned, however, that a prolonged conflict in West Asia could negatively impact the economy through higher fuel costs and supply chain disruptions.