2024-11-15 16:21:13 :
State Bank of India, India’s largest public sector lender, plans to raise up to $1.25 billion, the largest dollar loan in the country’s financial sector.
The bank is seeking a five-year loan arranged by ChinaTrust Bank, HSBC Holdings Plc and Taipei Fubon Bank, with a spread of 92.5 basis points based on risk-free guaranteed overnight financing rates, Bloomberg reported on Friday.
According to reports, the loan will be used for general corporate purposes at its branch in Gujarat International Financial Technology City (GIFT City).
However, SBI is yet to give any official confirmation regarding the loan.
Apart from SBI, several other non-bank financial companies also borrowed foreign currency funds.
Recently, Cholamandalam Investment & Finance Co sought to raise $300 million in syndicated term loans, reports said. Even the Sydney branch of Union Bank of India is seeking a three-year $125 million ($81 million) loan, while Bank of Baroda is borrowing $750 million.
Dollar loan volume declines
Despite these loans, dollar loan volumes in India fell 27% this year to $14.2 billion due to a lack of loans to large companies, the report said.
In July, SBI raised a $750 million three-year loan, the report added.
India’s largest banks including SBI, HDFC Bank and ICICI Bank were on Wednesday named Domestic Systemically Important Banks (D-SIBs) by the Reserve Bank of India (RBI). According to the Reserve Bank of India, SBI and HDFC Bank will report high buffer requirements from April 1, 2025.
State Bank of India will have to maintain an additional capital buffer of 0.80% of its risk-weighted assets, up from 0.60% currently. Meanwhile, the central bank said HDFC Bank will increase its capital buffer to 0.40% from the previous 0.20%.
SBI became the first bank to be recognized as a D-SIB in 2015, followed by ICICI Bank in 2016 and HDFC Bank in 2017.
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