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SBI to raise ₹15,000 cr via Tier II bonds to replace maturing debt

A senior SBI executive said the bank has approval from the board of directors to raise up to Rs 20,000 crore through debt capital in Fy26. Abhijit Lele Mumbai State Bank of India – the country's largest lender – plans to enter the debt capital market this financial year by issuing Tier-II bonds raising up to ₹15,000 crore to replace maturing paper and fresh issuance. A senior SBI executive said the bank has approval from the board of directors to raise up to ₹20,000 crore through debt capital in 2025-2026 (FY26). Out of this, additional Tier-I (AT1) is about ₹5,000 crore and Tier-II is about ₹15,000 crore. The timing, and coupon rate would be subject to market conditions, the executive added. Tier-II bonds worth ₹6,000 crore are maturing in FY26. SBI's Tier-II capital stood at ₹78,092 crore at the end of March this year, according to the red herring prospectus for raising equity capital from institutional investors in July. SBI has raised ₹25,000 crore of equity capital through Qualified Institutional Placement (QIP). Its capital adequacy ratio (CAR) stood at 14.63 per cent with common equity Tier-I of 11.1 per cent, additional Tier-I of 1.35 per cent, and Tier-II at 2.18 per cent at end of June. With the recent equity capital raise of ₹25,000 crore from institutional investors, the capital adequacy ratio will increase to 15.33 per cent. The capital requirements under Basel-III guidelines for banks in India indicate a minimum Tier-II level of 2.0 per cent in total CAR. The Tier-II instruments issued under Basel-III norms can be written down at the point of non-viability (PONV). According to rating agency CRISIL Ratings, the PONV trigger is a remote possibility in the Indian context. A robust regulatory and supervisory framework and the systemic importance of the banking sector are expected to ensure adequate and timely intervention by the Reserve Bank of India (RBI) to avoid a situation wherein a bank becomes non-viable. SBI's Tier-II capital base in percentage terms has seen moderation in the past three years with a ratio at 2.62 per cent for the year ended March 2023, 2.35 per cent in March 2024 and 2.14 per cent in March 2025.