SBI may need to raise only up to Rs 9K cr in capital in FY22

The country's largest bank State Bank of India may raise only up to Rs 9,000 crore in capital through additional tier I bonds (AT1 bonds) in the current financial year (FY22) and could consider additional raising plan only next year to further enhance it's capital adequacy profile.

Official sources said that the bank is sitting with a sound capital adequacy ratio (CAR) of 13.74 per cent and expects loan growth to touch close to 9 per cent in FY22. This would prevent the bank from raising full quanta of Rs 14,000 crore Tier-I capital raising plan that its board approved early this year.

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The SBI Central Board on Monday approved plan to raise up to Rs 14,000 crore in capital through additional tier I bonds (AT1 bonds) by way of issuance of Basel lll compliant debt instrument in rupee and/or US dollar in FY 22.

Sources said that most of the capital raised by the SBI would be used to finance the maturity of AT1 and Tier-II bond coming up this year. The maturity amount works to about Rs 9,000 crore that could be financed through the capital raised by the bank this year.

An SBI executive said that permission for Rs 14,000 crore capital raising plan is an enabling provision and the actual issuance will depend on the market conditions and credit growth in the system.

Sources said that the centre has approved the capital raise plan of the bank, but it could not be verified with the officials. Concurrence of the centre is important as it is promoter of the bank with 57.63 per cent stake as of March 31, 2021.

SBI's Common Equity Tier I (CETI) was 10.02 per cent in March 2021 higher than regulatory requirement of 7.97 per cent. Its AT-1 level was 1.42 per cent in March 2021, up from 1.23 per cent in March 2020.

With CETI higher than regulatory requirements, SBI is not hard pressed to raise capital and would approach the board and shareholders for requisite approvals as and when need arises.