According to sources, the State Bank of India plans to borrow up to $1.25 billion, making it India’s largest dollar-denominated bank loan in 2024. The reason behind raising this loan is for general corporate purposes. Another reason for this loan is SBI’s plan to syndicate the loan among other lenders to distribute the risk. SBI’s Gujarat branch at the Gujarat International Finance Tec-City is raising this loan request.
It will be a five-year loan with a 92.5 basis point interest margin over the risk-free Secured Overnight Financing Rate (SOFR). International finance institutions CTBC Bank, HSBC Holdings Plc, and Taipei Fubon Bank are arranging this huge loan.
With this, SBI will join several other borrowers who raised the country’s foreign currency debt in 2024. Cholamandalam Investment & Finance Co. is the latest Indian NBFC to borrow $300 million, a term loan. On the other hand, the Union Bank of India’s Sydney branch is raising an A$125 million ($81 million) three-year loan. Bank of Baroda will also raise a $750 million loan.
This loan announcement lines up with the RBI’s (Reserve Bank of India) reaffirmation that SBI is a D-SIB (Domestic Systemically Important Bank). SBI is still in the Top D-SIB category (Bucket-4) and mandates an additional 0.80% in CET1 (Common Equity Tier 1) by April of the following year.
Despite all the commotion, the country’s dollar loan volume has dropped by 27% to $14.2 billion. According to the sources, this is largely due to the absence of large company borrowings.
