SBIN

Set to Launch First Domestic Bank Bond of FY26, Aiming for ₹7,500 Crore

The State Bank of India (

) is planning to tap the debt market this week, likely on Friday, to issue 10-year tier-II bonds, which would mark the first major domestic bond issuance by a public sector bank in the current financial year (FY26). → SBI aims to raise up to ₹7,500 crore, comprising a base issue of ₹5,000 crore and a green-shoe option of ₹2,500 crore. The bonds will feature a five-year call option. The bank is expected to offer an estimated coupon rate of 6.90–6.95% on the bonds, which are generally considered riskier than senior debt but offer higher yields. → The proceeds from the issuance are intended to be used for meeting regulatory requirements and supporting business growth. Banks have generally remained on the sidelines of the bond market due to comfortable liquidity, stable deposit growth, and subdued credit demand from corporates. → SBI's credit growth has also slowed, with advances rising 11% year-on-year to ₹42.5 trillion as of June-end, slightly lagging deposit growth of 11.66%. → This planned issuance comes after SBI's board approved raising ₹20,000 crore via tier-I and tier-II bonds in FY26. Despite high liability costs and hardened yields in the debt market, SBI's bonds typically carry the lowest coupons among bank instruments, reflecting high investor confidence due to its size and government ownership. → Analysts suggest that a successful deal could encourage other lenders to return to the bond market, which has seen few offerings in recent months.