SBI to raise Rs 3k cr via long-term retail bonds
Financial Express
Tuesday, January 05, 2010
The State Bank of India, which is planning raise Rs 3,000 crore through retail bonds, would be a trend setter for other banks in this regard.
Speaking to FE, SS Ranjan, chief financial officer of the country's largest lender. said We are planning to raise a sum of Rs 3,000 crore through retail bond during the current fiscal. Apart from it, we are also planning to raise Rs 3,000 crore through few other instrument, but we are yet to finalise them.''
SBI, which is likely to offer over 8% for 10-year tenure, has applied to the Reserve Bank of India and Sebi for necessary approval.
However, market players say more and more nationalised banks may take the route of issuing long-term retail bonds.
We believe this step by SBI would be a test plan which will happen during the quarter. Moreover, it's a good avenue for retailers for long-term investments. RBI also wants banks to come up with such bonds and we think retailing of bonds will take shape in the future, said a dealer at a public sector bank.
SBI's long term bonds will be a huge success as there will be huge demand for the same. Other banks will also follow suit. There will be such new kind of instruments in the market giving consumer another choice, said Golak C Nath, vice president & economic advisor with CCIL.
KR Kamath, chairman & managing director, Punjab National Bank, said the bank has already raised capital worth Rs 700 crore recently, which comprises Rs 500 crore through tier-II and the remaining through tier-I bonds.
Still, we have got a headroom of raising Rs 6,800 crore through tier-II. Our currently CAR was at 14.5%. Still, we may go for capital raising to certain extent during the current fiscal in case we found the interest rates attractive,'' he said .
BA Prabhakar, executive director, Bank of India, said after already having raised a sum of Rs 1,300 crore through bonds, the bank's capital raising plan is over.
We may not raise any further during the current fiscal. Yes, we may go for capital raising during the next fiscal. Again, we are not looking at raising money through long-term retail bond. The reason is simple. While administration cost was quite high, one has to pay commissions to the retail brokers which further makes the issue expense higher,'' he said.
Canara Bank also raised a sum of Rs 600 crore through tier-II already during the current fiscal. We have got a headroom of raising capital valued at Rs 4,030 crore which comprise Rs 660 crore through IDPI, Rs 900 crore through preferential shares and Rs 2,460 crore through tier-II bonds. But we have no plan as of now to go for further capital raising during the current fiscal as our CAR was currently at 14.46%, said the bank's executive director HSU Kamat.
Simultaneously, Bank of Baroda has already raised Rs 1,900 crore so far in the current fiscal, which includes Rs 900 crore under tier I through innovative perpetual debt instrument (IPDI) and Rs 1,000 crore through tier-II bonds.
Sources :: State Bank of India |
