“…issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor,” said Dinesh Khara, chairman, SBI.

Money raised through infrastructure bonds is advantageous for banks because it is exempt from regulatory reserve requirements such as the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). Unlike funds raised through deposits, where banks must maintain 4.5 per cent of the amount as CRR with the Reserve Bank of India (RBI) and invest approximately 18 per cent in securities to meet SLR obligations, infrastructure bond proceeds can be fully deployed towards lending activities.

Several other state-owned lenders such as Canara Bank and Bank of India are also planning to raise funds through infrastructure bonds.

Meanwhile, another public sector lender, Bank of Baroda (BoB), is planning to raise funds through a USD issuance. BoB has decided to issue $500 million standalone REG S bonds under a medium-term notes (MTN) programme of $4 billion. The bank has invited applications for joint lead managers for the proposed international USD bond issuance.

Previously, in January, SBI had raised $600 million by issuing a five-year paper from a clutch of investors across the globe as part of its $10 billion medium-term note programme. Following this, a clutch of non-banking finance companies (NBFC), including Shriram Finance, Muthoot Finance, Manappuram Finance, and Sammaan Capital (erstwhile Indiabulls Housing Finance), raised money through USD bonds.

First Published: Jul 10 2024 | 6:07 PM IST