Mumbai:
Indian banks are tapping the overseas debt market in a
big way with the majors likes SBI, IDBI and Punjab National
Bank, already lining up plans to borrow over Rs7,500 crore
this year.
The
State Bank of India, the country's largest bank, will
raise Rs3,075 crore through long-term debt in the overseas
market by March, to meet lending and capital requirements.
IDBI
is planning to raise up to Rs1,500 crore in lower Tier
II bonds to support credit needs in the next 12 months.
It also plans to shore up capital to meet Basel II norms
and supplement capital bonds redemption. The bank has
raised Rs1,418 crore as Tier II capital during the current
financial year.
Among
other large public sector banks, Punjab National Bank
had last month proposed to raise Rs1,000 crore through
issue of bonds in the overseas market. Bank of India is
also expected to raise funds in the current year through
overseas bond issue.
Bank
of India informed the Bombay Stock Exchange (BSE) last
month that it would raise Rs2,000 crore through issue
of Tier I and Tier II bonds on private placement basis.
BoI would raise up to Rs382.5 crore by way of Tier I capital
and Rs1,200 crore through Tier II bonds. The bank did
not specify the timing of these bonds.
Indian
banks are also reported to be tapping the loan syndication
market in a big way. While foreign banks still top the
tables, ICICI Bank and SBI have emerged as number three
and number five with 13 deals ($1.01 billion) and with
17 deals ($951 million), respectively, according to Basis
Point, a journal that tracks loan syndication deals.
New
players like UTI Bank (which started its Singapore branch
last year) are also getting into the play.
However,
these deals also include loans to corporates and financial
institutions. Banks were major issuers in the loan syndication
market. They normally raise loans for one or three years
unlike corporates which raise loans for longer tenure
of five years and above. Other than expansion, corporates
have also been borrowing for acquisitions.
Indian
corporates had made $8.5 billion of overseas acquisitions
which was double that of the previous year. And, with
interest rates
in India going up, corporates are most likely to tap the
overseas market. If the coming budget removes the withholding
tax, then oversees loans would become cheaper and more
attractive to borrowers.
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