SBI to mobilise Rs 2k-cr via Basel-III bonds

3 Aug 2017

India’s largest lender State Bank of India plans to raise Rs 2,000 crore by allotting Basel-III compliant bonds to various investors.
"The committee of directors for capital raising accorded its approval today to allot 20,000 AT1 Basel-III compliant non-convertible, perpetual, subordinated bonds in the nature of debentures... aggregating Rs 2,000 crore to various investors," State Bank of India (SBI) said in a regulatory filing on Thursday.
SBI said the bonds will carry a coupon rate of 8.15 per cent per annum with a call option after 5 years or the anniversary date thereafter.
Shares of SBI were trading 1.67 per cent lower at Rs 302.50 on the BSE.
Meanwhile Finance Minister Arun Jaitley Thursday defended the State Bank of India's decision to cut interest rate on saving accounts of less than Rs 1 crore, saying the move was in sync with reduction in lending rate.
Responding to a Zero Hour mention of the SBI's decision to cut interest rate on saving accounts with less than Rs 1 crore deposit to 3.5 per cent from 4 per cent, he said to protect the interests of senior citizens, the government has already floated a deposit scheme that guarantees 8-plus per cent interest rate.
High interest rate on savings and fix deposits was during a time when inflation was 10-11 per cent and sluggishness was setting in the economy. So when the lending rate came down, so did savings account, Jaitley said.
He said for senior citizens and retired persons, the government has bought a pension scheme that guarantees 8 per cent interest rate.
Prime Minister Narendra Modi had announced the Pradhan Mantri Vyaya Vandana Yojana (PMVYY) in December last year which was launched in May.
"The effective rate comes to 8.3 per cent," he said, adding that the scheme is managed by LIC.
To opposition demand for a discussion on sluggish in economy and job losses, he said all issues the opposition want can be discussed and debated if they allow the House to function from 11 AM to 6 PM every day.
Earlier, Derek O'Brien (TMC) raised the issue through a Zero Hour mention saying the SBI reasoned the decision to Rs 1.5 lakh crore moving into the banking system after demonetisation of old 500 and 1000 rupee notes. There was no pick up in borrowing and economic activity was low, he said. (PTI)