SBI’s board clears raising up to Rs 10,000 cr via infra bonds in FY23 | The Financial Express

SBI’s board clears raising up to Rs 10,000 cr via infra bonds in FY23

The board’s approval comes at a time when tight liquidity conditions in the banking system have left banks scurrying for deposits.

SBI’s board clears raising up to Rs 10,000 cr via infra bonds in FY23
Infrastructure bonds typically have an edge in such a scenario as the money raised through the issuance of these bonds will be excluded while maintaining a cash reserve ratio (CRR) and statutory liquidity ratio (IE)

The board of State Bank of India (SBI) on Tuesday approved raising of Rs 10,000 crore through infrastructure bonds in the current fiscal. The issue includes a green-shoe option of Rs 5,000 crore and the bonds could be sold through a public issue or a private placement.

The board’s approval comes at a time when tight liquidity conditions in the banking system have left banks scurrying for deposits. Apart from this, the systemic credit growth has far outpaced the growth in deposits. Infrastructure bonds typically have an edge in such a scenario as the money raised through the issuance of these bonds will be excluded while maintaining a cash reserve ratio (CRR) and statutory liquidity ratio (SLR). In essence, banks will have more funds to lend.

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According to RBI’s norms, long-term bonds with a minimum maturity of seven years that raise resources for lending to long-term projects in infrastructure sub-sectors and affordable housing are exempted from the CRR, SLR and the priority sector lending.

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First published on: 30-11-2022 at 02:30:00 am
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