State Bank of India (SBI), the country’s largest lender, has announced plans to raise ₹15,000 crore through Tier II bonds during the current financial year. The capital will be used to replace maturing debt and support fresh issuance, as part of the bank’s broader strategy to strengthen its balance sheet and maintain regulatory capital levels.
According to senior SBI officials, the bank’s board has approved raising up to ₹20,000 crore in FY26 through debt instruments. Of this, ₹15,000 crore will be mobilized via Tier II bonds, while ₹5,000 crore is earmarked for Additional Tier I (AT1) bonds. The timing and coupon rate of the issuance will depend on prevailing market conditions.
SBI’s Tier II capital base has seen a gradual decline over the past three years, standing at 2.14% of risk-weighted assets as of March 2025, down from 2.62% in March 2023. The bank has ₹6,000 crore worth of Tier II bonds maturing in FY26, necessitating timely replacement to maintain its capital adequacy ratio (CAR).
As of June 2025, SBI’s CAR stood at 14.63%, comprising 11.1% common equity Tier I, 1.35% AT1, and 2.18% Tier II capital. Following a recent ₹25,000 crore equity capital raise via Qualified Institutional Placement (QIP), the CAR is expected to rise to 15.33%.
The Tier II bonds will be issued under Basel III norms, which include provisions for write-down at the point of non-viability (PONV). However, rating agencies such as CRISIL consider the PONV trigger a remote possibility in India, citing strong regulatory oversight and the systemic importance of major banks like SBI.
