State Bank of India (SBI) has raised $1 billion to cater to the domestic ESG (Environmental, Social and Governance) financing market. The funds were raised through a syndicated social loan and will be used to support ESG initiatives in India. SBI had raised $1 billion through a similar loan last year. The funds were raised through two tenures: a three-year and a five-year loan, with interest rates based on the secured overnight financing rate (SOFR). SBI reported an 8% increase in net profit during the last quarter and has improved its asset quality with a decrease in non-performing assets. The bank’s gross non-performing asset ratio currently stands at 2.55%.
State Bank of India (SBI) has raised $1 billion to cater to the domestic ESG financing market. The funds were raised through a syndicated social loan, with $750 million raised for a three-year loan and an additional $250 million raised for a five-year loan. This fund will be used to support Environmental, Social, and Governance (ESG) initiatives in India.
Last year, SBI raised $1 billion through a similar syndicated social loan to support ESG activities. It appears that SBI is continuing to tap into the ESG financing market to meet growing demand in India. The bank stated that the loan book was closed on January 2, 2024, suggesting that there was good interest and participation from international investors.
The funds raised by SBI will be used to finance various projects and activities that contribute to sustainable development in India. ESG financing encompasses a range of sectors, such as renewable energy, clean technology, social housing, and sustainable agriculture. These funds will help promote and drive the transition towards a more sustainable and inclusive economy in the country.
The interest rates for the loans were based on the secured overnight financing rate (SOFR). SOFR is a benchmark rate for dollar-denominated derivatives and loans, which has replaced the London Interbank Offered Rate (LIBOR). The interest rates were set at 80 basis points and 100 basis points over SOFR for the three-year and five-year loans, respectively.
SBI’s fundraising efforts come after reporting positive financial results for the last quarter. The bank saw an 8% increase in its net profit to ₹14,330 crore and a 12.3% increase in net interest income (NII) to ₹39,500 crore compared to the same period last year. Additionally, SBI has shown improvements in its asset quality, with a decrease in gross non-performing assets ratio to 2.55% as of September 30, 2023.
The success of SBI’s syndicated social loan highlights the growing interest and importance of ESG financing in the global market. Investors are increasingly looking for opportunities to support sustainable and socially responsible initiatives, and banks like SBI are responding to this demand by offering specialized financing solutions. SBI’s efforts to raise funds for the domestic ESG market demonstrate its commitment to supporting sustainable development in India and its readiness to meet the evolving needs of its customers.
