The State Bank of India will consider raising fund up to Rs 12,679 crore in its board meeting scheduled on January 8, ET Now reported. India’s leading public sector bank to consider raising up to $2 billion or Rs Rs 12,679 crore in long-term funds in tranches for the fiscal year 2018 and the fiscal year 2019 through the public offer and the private placement of bond.
On December 27, the bank said that it has received its board’s approval to raise Rs 8,000 crore to meet Basel-III capital adequacy norms through various instruments including Masala Bonds. “The central board, at its meeting held today, accorded approval to raise additional tier 1 (AT 1) capital by way of issuance of Basel III compliant debt instruments in USD and/or INR to the tune of ₹8,000 crore from domestic/international markets including masala bonds,” the bank said in a regulatory filing on December 27.
Masala bonds are rupee- denominated specialised debt instruments that can be floated in overseas markets only to raise capital. The SBI said it had time until March 2018 to raise the funds. Banks in India have to comply with the global capital norms under Basel III by March 2019, three months later than the internationally-agreed time frame, by January 2019.
What is Basel III?
Basel III is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk. Basel III is intended to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.
Meanwhile, the Narendra Modi government on Thursday sought parliamentary nod for additional Rs 80,000 crore bonds for the recapitalisation of public sector banks (PSBs) which are sitting on a pile of Rs 9.8 lakh crore bad loans. In October, the government announced an unprecedented Rs 2.11 lakh crore bank recapitalisation plan, of which Rs 1.35 lakh crore was in form of recap bonds and rest in form of budgetary allocation and market raising.
In 2015, the government had launched the Indradhanush plan to infuse Rs 70,000 crore in PSBs over four years to meet their capital requirement in line with Basel-III.