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Raising resources via infrastructure bonds could be one of the ways forward in future given the tight pricing that State Bank of India (SBI) got for its maiden issuance of these bonds, according to Managing Director C Sreenivasulu Setty.
India’s largest bank raised ₹10,000 crore through its maiden infrastructure bond issuance on December 2 at coupon rate of 7.51 per cent.
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SBI raises ₹10K cr via infra bonds at 7.51 per cent
The amount raised will be utilized in enhancing long term resources for funding infrastructure and affordable housing segmentThe coupon rate represents a spread of 17 basis points over the corresponding Government of India Security.
“We keep expanding our ability to raise funds. Infrastructure bonds is the latest one. We have not raised funds via infrastructure bonds earlier,” Setty said at the sidelines of the Indian Banks’ Association’s 18th Annual Banking Technology Conference.
The SBI MD observed that funds raised via these bonds can be used for ongoing infrastructure projects as well as for refinancing earlier projects.
“We have a huge infrastructure financing book. I don’t think the bond programme envisages that it will be only for (financing) infra projects going forward. Our existing book is also covered under that,” Setty said.
Infra loan book
As at September-end 2022, SBI had an infrastucture loan book of ₹3,67,889 crore, accounting for 14.44 per cent of domestic advances.
He underscored that most of the long-term infrastructure bonds are subscribed by pension funds and insurance companies.
“We are not looking to raise more funds via this route at this juncture,” Setty said.
The benefit of raising long-term funds via infrastructure bonds is that there are no regulatory pre-emptions in the form of cash reserve ratio and statutory liquidity ratio. Further, resources deployed in infrastructure sector are not counted in net bank credit for arriving at priority sector lending target for banks.
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