The State Bank of India, India’s largest public sector bank, is planning to raise up to $1.25 billion, marking the biggest dollar-denominated loan in the country’s financial sector.
The bank is looking for a five-year loan, which is being arranged by CTBC Bank, HSBC Holdings and Taipei Fubon Bank with an interest margin of 92.5 basis points at the risk-free Secured Overnight Financing Rate, reported Bloomberg on Friday.
This loan will be used for general corporate purposes at its branch in Gujarat International Finance Tec-City (GIFT City), the report said.
However, SBI has not yet given any official confirmation on the loan.
Apart from SBI, several other non-banking financing companies have also borrowed money in foreign currency.
Recently, Cholamandalam Investment & Finance Co has sought to raise a $300 million syndicated term facility, the report said. Even the Sydney branch of Union Bank of India is seeking $125 million ($81 million) for a three-year term, whereas Bank of Baroda is borrowing $750 million.
Dollar loan volume declines
The report said that despite these loans, India’s dollar loan volume has declined 27 per cent to $14.2 billion this year due to the absence of large company loans.
In July, SBI raised a three-year loan of $750 million, the report added.
On Wednesday, India’s biggest banks, such as SBI, HDFC Bank, and ICICI Bank, were named as domestic systemically important banks (D-SIBs) by the Reserve Bank of India (RBI) on Wednesday. SBI and HDFC Bank will report high buffer requirements from April 1, 2025, according to RBI.
The State Bank of India will have to maintain an additional capital buffer of 0.80 per cent of its risk-weighted assets, an increase from its current 0.60 per cent. Meanwhile, HDFC Bank will increase the capital buffer to 0.40 per cent from 0.20 per cent earlier, according to the central bank.
SBI was the first bank to be recognised as a D-SIB in 2015, followed by ICICI Bank in 2016 and HDFC Bank in 2017.
