According to a recent press report State Bank of India has planned to raise overseas fund to meet the foreign currency requirements of its customers.
In his statement Mr. Hemant Contractor, Managing Director of International Operations of SBI said that the bank would decide on raising overseas funds next month.
The bank has already planned to raise $1 billion through the issue of a medium term note (MTN) but due to the unfavorable market conditions it has decided to revise the plan.
The bank’s overseas fund raising program has also been affected due to the downgrading from D+ to C- by the Moody credit rating agency. The rating agency has also downgraded the bank’s hybrid debt rating from Ba2 (hyb) to Ba3 (hyb) which would also lead to higher borrowing costs for the bank. Usually the banks raise overseas funds in order to meet the foreign currency requirements of the Indian customers.
Mr. Contractor said that if the bank has decided to issue MTN and raise the funds at least $500 million would be raised. However he made it clear that there was no urgency to raise the funds besides, raising funds through MTN issue is considered to be Tier II capital for the bank. The bank has recently announced special rates on home loan and car loans as part of its festival offer.