State Bank of India’s Central Board on Monday accorded approval for raising fresh Additional Tier 1 (AT-1) capital up to an amount of ₹14,000 crore.
The fundraising, subject to the Government’s concurrence, will be through the issuance of Basel III compliant debt instruments in US Dollar and /or Indian Rupee during FY 22, India’s largest bank said in a regulatory filing.
During FY21, SBI mopped up ₹6,500 crore via Basel III compliant debt instruments under AT-1 and ₹20,931 crore via Tier - 2 capital, as per the bank’s annual report.
During FY21, the bank redeemed AT-1 Bonds aggregating to ₹200 crore and Tier-2 Bonds aggregating to ₹16,647.83 crore.
In the annual report, Dinesh Kumar Khara, Chairman, said: “The bank is comfortably placed in terms of growth capital. Opportunities for lending in promising sectors will be explored to diversify the portfolio and contain risk.”
Capital adequacy
The report observed that the capital adequacy of the bank improved during the last financial year on the back of better capital planning, internal resource generation and containment of risk in banking books as reflected in 202 basis point (bps) reduction in credit risk-weighted assets on advances to gross advances ratio.
The capital adequacy position of the bank improved from 13.06 per cent in March last year to 13.74 per cent in March 2021. The CET (Common Equity Tier) 1 capital and AT-1 capital ratios put together increased by 44 bps to 11.44 per cent.
The bank also increased its Tier-II capital base to 2.30 per cent in March 2021 from 2.06 per cent the previous year.