State Bank of India, India's biggest lender, will take a call on raising funds through medium-term notes (MTN) in November. "If the MTN happens, it will be upwards of $500 million (Rs 2,400 crore)," said Hemant Contractor, managing director, SBI.
Medium-term notes are bearer bonds that can be issued on a revolving basis within the framework of a programme unrestricted by time.
Contractor said "the extent of the amount," is a call the bank has to take, adding it would be a "benchmark issue", which normally means the minimum issue size would be $500 million.
The bank had earlier announced that it would double its MTN borrowings to shore up the tier-II capital to $10 billion this fiscal.
The fund raised will be used to give loans mainly to Indian companies operating abroad.
SBI chairman Pratip Chaudhuri, in September, had hinted at raising over $1 billion in November but sounded skeptical following the downgrade by Moody's to D+ from C- and pointed to issues with asset quality and lower capital adequacy of the bank.
FM's pat for PSU banks
Finance minister Pranab Mukherjee on Friday said the Indian banking sector has responded well to difficult global environment by meeting credit needs of the economy.
"Banking sector in India has responded positively to meet the credit needs of the economy," Mukherjee said at the 81st foundation day celebrations of Vijaya Bank in New Delhi.
He said the sovereign debt crisis of Europe has once again brought into focus the need for better co-ordination between monetary and fiscal policies towards improving overall economic stability and growth.