Sources reported on Wednesday that public sector banks have raised a total of ₹4,000 crore through AT-1 bonds this fiscal year, and are expected to raise much more, as they aim to finance credit growth and replace bonds falling due this year.
India’s largest lender State Bank of India (SBI) on Wednesday said its board has approved raising up to ₹11,000 crore in bonds during the current financial year.
“The central board of the bank at its meeting held today accorded approval for raising capital by way of issuance of Basel III-compliant debt instrument in dollar/rupee and/or any other convertible currency, during FY23…” it said in a regulatory filing.
While the plan is to raise additional tier 1 (AT-1) capital of up to ₹7,000 crore, subject to government of India concurrence, the remaining ₹4,000 crore would be in the form of fresh tier 2 capital. At the end of March, SBI’s total capital adequacy ratio stood at 13.83%, with tier 2 at 2.41% and AT-1 at 1.48%.
Sources reported on Wednesday that public sector banks have raised a total of ₹4,000 crore through AT-1 bonds this fiscal year, and are expected to raise much more, as they aim to finance credit growth and replace bonds falling due this year.
While Punjab National Bank was the first to hit the market, raising ₹2,000 crore through AT-1 bonds at 8.75% this month, Canara Bank, too, raised ₹2,000 crore, but at a lower interest rate of 8.24%.
AT-1 bonds, also called perpetual bonds, carry no maturity date, but have a call option at the end of five years. These are issued by banks to augment their core equity base, and thus comply with Basel III norms.
