SBI’s $1 billion ESG loan completed: Largest ever social syndicated loan by an Asia Pacific commercial bank

State Bank of India has raised Asia Pacific’s largest ever ESG loan of $1 billion in syndicated social funds for further onlending to smaller institutions to aid social sector funding. SBI has raised this $1 billion fund, including a greenshoe of $500 million, from global banks. The loan is significant for SBI and also the ESG financing market in India, as it is the largest ESG loan by a commercial bank in the Asia Pacific and the second-largest social loan globally, SBI said in a statement. Also, this is SBI’s inaugural social loan and the first syndicated loan in the past five years.

The funds will be used to further lend to microfinance institutions and self-help groups, Reuters reported citing an unidentified senior officer at SBI. “Issuance of our first social loan is an embodiment of our commitment to ESG driven by our belief that our long-term success depends not only on our financial performance but also on our ability to make a positive impact on the environment, on society, and on our stakeholders,” said Dinesh Khara, Chairman, SBI, in the statement.

The loan was facilitated through MLABs, MUFG Bank, and Taipei Fubon Commercial Bank Co. Ltd. While MUFG and Taipei Fubon Commercial Bank are Joint Social Loan Coordinators for this transaction, MUFG is the Lead Social Loan Coordinator. The transaction witnessed participation from banks across Taiwan, Japan, China, and the Middle East ensuring a full subscription, including USD 500 million of the greenshoe option.

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This development could help SBI’s push towards adopting ESG practices. The Reserve Bank of India and the central government are working towards shaping up India’s green financing guidelines. Earlier this month, the RBI had said that it is working on unveiling guidelines on green financing, including special deposits for green projects. Governor Shaktikanta Das had said that these would be the first set of measures that will be aimed at addressing the impacts of climate change on the financial system.

A Reuters report citing a survey had, earlier, said that Indian banks are not prepared to adopt environmental, social and governance (ESG) norms as part of their lending models.