SBI Mumbai/IBNS: The State Bank of India (SBI) is set to raise up to $1.25 billion through a dollar-denominated loan, marking the largest such borrowing by the country’s financial sector this year, Bloomberg reported, citing sources familiar with the matter.
According to Bloomberg, the five-year loan is being arranged by CTBC Bank, HSBC Holdings Plc, and Taipei Fubon Bank, with an interest margin of 92.5 basis points above the Secured Overnight Financing Rate (SOFR).
The funds are being raised through SBI's branch at the Gujarat International Finance Tec-City (GIFT City), India’s emerging financial hub, and will be used for general corporate purposes.
The loan is being syndicated to other financial institutions, sources told Bloomberg.
SBI has not officially commented on the matter yet.
India’s largest lender is part of a growing trend of domestic entities raising foreign currency loans.
Non-banking finance companies (NBFCs), or shadow banks, have increasingly turned to overseas borrowing in response to tighter regulations within India.
Among recent deals, Cholamandalam Investment & Finance Co. is seeking a $300 million syndicated loan, while Union Bank of India’s Sydney branch is marketing a three-year A$125 million ($81 million) facility.
Bank of Baroda is also in the process of raising $750 million through a loan.
Despite these developments, overall dollar loan volumes in India have dropped by 27 percent this year to $14.2 billion, due to the absence of large-scale corporate borrowings, according to Bloomberg data.
In July, SBI had previously raised a $750 million three-year loan, demonstrating its continued reliance on foreign currency markets for funding.
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