State Bank of India (SBI) is now preparing to take the country's biggest loan. The company plans to borrow up to $1.25 billion i.e. Rs 10,552 crore, which will be the largest loan deal from India's financial sector this year. Sources associated with the matter said that this loan will be taken for a period of five years and it is being raised through Gujarat International Finance Tech-City (GIFT City) branch.
The deal is being led by CTBC Bank, HSBC Holdings PLC and Taipei Fubon Bank. The interest rate on the loan has been kept 92.5 basis points above the Secured Overnight Financing Rate (SOFR). Its objective is to provide financial facilities for general corporate operations. This loan is being syndicated to other financiers, which will provide it with broader financial support.
SBI has joined many Indian financial institutions and companies active in raising foreign currency loans this year. In July 2024, SBI had raised a three-year loan of $750 million. Additionally, non-banking finance companies (NBFCs) have also turned to foreign loans due to pressure from domestic regulations.
Cholamandalam Investment and Finance Company has recently become the latest Indian NBFC to raise a syndicated term facility of $300 million. Similarly, Bank of Baroda is in the process of raising a loan of $750 million and the Sydney branch of Union Bank of India is in the process of raising a loan of $81 million (A$125 million). According to Bloomberg data, India's total dollar loan volume is expected to decline by 27% to $14.2 billion in 2024. The main reason for this is believed to be less borrowing by big Indian companies, although many small and medium financial institutions have been active in recent months.
This step of SBI reflects the acceleration in the activities of raising dollar-denominated loans in the financial sector of the country. This effort to raise funds through GIFT City also strengthens India's role as an international financial centre. SBI has not yet made any official comment on the deal, but this initiative not only reflects the growing global ambitions of Indian financial institutions, but also presents new opportunities for investors.
