India’s leading lender, State Bank of India (SBI), has successfully raised a substantial Rs 10,000 crore through the issuance of 15-year infrastructure bonds. These bonds, carrying an annual coupon rate of 7.36%, have been met with an overwhelming response from investors, exceeding the initial target of Rs 5,000 crore by almost four times.
SBI has outlined its plans to utilize the proceeds of these bonds to bolster its long-term resources for funding various infrastructure projects, encompassing highways, power plants, and affordable housing initiatives. The bank’s Chairman, Dinesh Khara, highlighted the significance of this issuance in promoting the development of a long-term bond curve, thereby encouraging other banks to follow suit and issue bonds with extended tenors.
A key advantage of these infrastructure bonds lies in the exemption from regulatory reserve requirements such as the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio. This exemption allows SBI to fully allocate the proceeds as loans, generating interest income.
India’s economy is experiencing rapid expansion, fueling a growing demand for investments in infrastructure projects. These projects, however, often require substantial capital and have a lengthy gestation period. SBI’s successful bond issuance demonstrates the strong investor confidence in India’s infrastructural growth potential, paving the way for continued development and economic prosperity.
