SBI plans to raise up to Rs 2,000 cr by bonds next month
The country's largest lender State Bank of India (SBI) plans to raise up to Rs 2,000 crore through bonds to be offered to retail investors next month.india Updated: Jan 16, 2011 12:14 IST
The country's largest lender State Bank of India (SBI) plans to raise up to Rs 2,000 crore through bonds to be offered to retail investors next month.
"We are planning to come out with the bonds in February after third quarter results are announced," SBI Chairman O P Bhatt told PTI.
The executive committee of the central board of the bank last month accorded approval for raising the capital through bonds.
The board has also given approval for raising Rs 1,000 crore with a green-shoe option.
The bank intends to deploy the proceeds to augment its capital base in line with its growth strategy.
The first retail bond issue of Rs 1,000 crore by SBI was made in October which was subscribed over 17 times on the opening day itself. The bank had to curtail the subscription period as the response to the bonds was beyond anticipation.
The offering comprised issue of bonds worth Rs 500 crore, with an option to raise it further up to Rs 500 crore by issuing additional bonds.
The bonds issued in two variants, Series 1 and Series 2 having maturity of 10 years and 15 years respectively, with a face value of Rs 10,000 each. The bonds offers an interest of 9.25 per cent for 10 years and 9.5 per cent for 15 years.
The bonds are not deposits of the bank and are not guaranteed or insured and they may not be used as collateral for any loan made by the bank or any of its subsidiaries or affiliates. Bonds are different from fixed deposits and are not covered by deposit insurance, it added.
Speaking about expectation from forthcoming quarterly review of RBI, he said the central bank is likely to increase its key policy rates by at least 25 basis points.
"Conventional wisdom says that there should be at least 25 basis points hike in interest rate," he said.
The RBI is scheduled to unveil its third quarterly review of monetary policy on January 25.