Mumbai: State Bank of India (SBI), the country’s largest lender, has successfully raised ₹4,691 crore through Basel III-compliant Additional Tier 1 (AT-1) bonds at a coupon rate of 7.75%, marking the bank’s first such issuance in the current financial year (FY27).
The issue received a strong response from investors, with bids exceeding two times the base issue size of ₹3,000 crore. SBI said the successful fundraising will help diversify its funding sources and strengthen its long-term non-equity regulatory capital.
SBI’s First AT-1 Bond Issue of FY27
The latest issuance is SBI’s first perpetual bond issue by a bank in FY27.
The key features of the bond issue include:
- Amount raised: ₹4,691 crore
- Instrument: Basel III-compliant Additional Tier 1 (AT-1) bonds
- Coupon rate: 7.75% per annum
- Coupon payment: Payable annually
- Nature: Perpetual bonds
- Base issue size: ₹3,000 crore
- Total issue size: ₹5,000 crore
- Call option: After five years and on every anniversary thereafter
- Credit rating: AA+ with stable outlook
- Rating agencies: CRISIL Ratings Limited and CARE Ratings Limited
The bank accepted ₹4,691 crore based on the strong demand received from investors.
Issue Receives Strong Response from Institutional Investors
The AT-1 bond issue attracted significant interest from qualified institutional bidders.
SBI received 89 bids from a diverse group of institutional investors, including:
- Provident funds
- Pension funds
- Mutual funds
- Banks
- Other qualified institutional bidders
The bids received were more than twice the base issue size of ₹3,000 crore, highlighting the strong demand for SBI’s regulatory capital instruments.
According to SBI Chairman C S Setty, the wide participation and diverse nature of the bids demonstrated the confidence and trust investors place in the country’s largest bank.
SBI Accepts ₹4,691 Crore at 7.75% Coupon Rate
Following the strong investor response, SBI decided to accept ₹4,691 crore at a coupon rate of 7.75%, payable annually.
The successful issue allows the bank to diversify its funding base while raising long-term non-equity regulatory capital.
The fundraising also strengthens SBI’s capital position without requiring the issuance of additional equity shares, making AT-1 bonds an important component of the bank’s capital management strategy.
What Are Basel III-Compliant AT-1 Bonds?
Additional Tier 1 bonds are debt instruments issued by banks to raise capital and strengthen their financial position.
Under the Basel III framework, AT-1 bonds qualify as regulatory capital and have specific loss-absorption features designed to help banks withstand periods of financial stress.
Unlike conventional bonds, AT-1 instruments are perpetual, meaning they do not have a fixed maturity date. However, the issuer may have a call option after a specified period, subject to applicable regulatory conditions.
The key characteristics of AT-1 bonds include:
- No fixed maturity date.
- Qualification as Additional Tier 1 regulatory capital.
- Loss-absorption features during financial stress.
- Potential call option after five years, subject to regulatory approval.
- Generally higher risk than conventional bank bonds because of their loss-absorption characteristics.
AT-1 Bonds Support Banks’ Long-Term Capital Requirements
The issuance comes as banks prepare for higher capital requirements over the medium term.
In addition to supporting balance-sheet growth, lenders are expected to strengthen their capital buffers in line with the phased implementation of the Reserve Bank of India’s Expected Credit Loss (ECL) framework and evolving Basel capital requirements.
Against this backdrop, AT-1 bonds provide banks with a source of perpetual regulatory capital while allowing them to raise funds without diluting existing equity shareholding.
SBI Plans to Raise Up to ₹60,000 Crore in FY27
The latest AT-1 bond issue is part of SBI’s broader fundraising plans for FY27.
The bank had announced plans to raise up to ₹60,000 crore through debt instruments during FY27, denominated in rupees and/or other convertible currencies.
The proposed fundraising programme may include:
- Long-term bonds
- Basel III-compliant AT-1 bonds
- Tier-II bonds
The fundraising may be carried out through public issues or private placements during FY27, subject to government approval wherever required.
The proposed debt issuances may also be offered to both domestic and overseas investors, depending on the applicable regulatory and market conditions.
SBI Raised ₹13,551 Crore Through Tier-II Bonds in FY26
SBI also raised significant capital through debt and equity markets during the previous financial year.
In FY26, the bank raised ₹13,551 crore through two tranches of Tier-II bonds.
The lender also mobilised ₹25,000 crore through a Qualified Institutional Placement (QIP), which was described as the largest such issuance in the history of the Indian capital market.
The latest AT-1 bond issuance further highlights SBI’s continued focus on maintaining a strong capital base and diversifying its funding sources.
About State Bank of India (SBI)
State Bank of India (SBI) is India’s largest public sector bank and one of the country’s most trusted financial institutions. Headquartered in Mumbai, SBI provides a wide range of banking and financial services, including retail banking, corporate banking, digital banking, investment services, and international banking operations.
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