India’s top lender SBI to raise up to 500 billion rupees via debt in FY24

BENGALURU (Reuters) -State Bank of India, the country’s largest lender, said on Friday it plans to raise up to 500 billion rupees ($6.06 billion) this financial year by issuing debt instruments, as lenders look to meet rising demand for credit.

SBI will raise the funds in rupee or any other convertible currency by issuing debt instruments, including long-term bonds, Basel III-compliant Additional Tier-1 (AT-1) bonds and Tier-2 bonds, the bank said in an exchange filing.

The fund-raising plans come as lenders’ loan growth outpaces growth in deposits.

Demand for bank loans has consistently stayed in double digits despite a 250-basis points rise in interest rates since May last year.

SBI’s loans grew nearly 16% on-year in the January-March quarter, compared with a 9.19% growth in deposits. The lender expects loans to grow 12-14% in fiscal 2024.

In April, SBI raised $750 million through five-year dollar-denominated bonds at a semi-annual coupon of 4.8750% through its London branch.

In March, the lender locally raised 37.17 billion rupees through Basel III-compliant AT-1 perpetual bonds at a coupon of 8.25%.

Last month, SBI reported a more-than-83% jump in fourth-quarter profit, led by a sharp drop in provisions on bad loans and healthy credit growth.

SBI shares are down about 1% since the results and about 5.5% lower so far this year.

($1 = 82.4600 Indian rupees)

(Reporting by Ashish Chandra in Bengaluru; Editing by Sohini Goswami)