The State Bank of India (SBI) is preparing to secure a significant foreign currency loan through its Gujarat International Finance Tec-City (GIFT City) branch, with funds earmarked for general corporate purposes. To mitigate risks, SBI plans to syndicate the loan across multiple lenders. This move aligns with the increasing trend of Indian institutions tapping into foreign currency debt markets in 2023, spurred by tighter domestic financing regulations.
While SBI’s loan is one of the largest initiatives in this space, it is not alone. Cholamandalam Investment & Finance Co., a non-banking financial institution, recently pursued a $300 million syndicated loan. Meanwhile, Union Bank of India’s Sydney branch is arranging a three-year A$125 million loan, and Bank of Baroda is set to raise $750 million.
Interestingly, despite these notable deals, the total dollar-denominated loan volume for India has dropped by 27% in 2023, standing at $14.2 billion. This decline, as reported by Bloomberg, is primarily due to reduced borrowing by large corporations.
SBI’s latest fundraising comes on the heels of its $750 million three-year loan secured in July, reinforcing its focus on diversifying funding sources. The timing coincides with the Reserve Bank of India’s recent confirmation of SBI as a Domestic Systemically Important Bank (D-SIB). Holding this designation, SBI is mandated to maintain additional capital buffers, remaining in the highest D-SIB category (bucket 4), which requires an additional 0.80% in Common Equity Tier 1 (CET1) capital by April 2025.
While the details remain unconfirmed, SBI has yet to issue an official statement. Business Today noted that the bank’s stock closed at ₹805.95 on November 14, reflecting a slight dip of ₹2.70 (0.33%).
