State Bank of India's Central Board approved raising up to ₹60,000 crore in FY27 through a mix of long-term bonds, Basel III-compliant Additional Tier 1 (AT1) bonds, and Tier 2 bonds — via public issues or private placements in both rupee and foreign currencies.
SBI just announced it will borrow ₹60,000 crore in a single year. Not equity. Debt. That distinction is the entire lesson.
Here's the capital structure question a CFO always asks: when you need money, do you sell more of the company, or do you borrow? SBI chose to borrow — and deliberately. Issuing new equity would dilute the Government of India's ~57% stake, which is politically and practically off the table. Debt lets the bank grow its balance sheet without touching ownership.
But not all debt is equal. SBI is raising three flavours. Long-term bonds are plain vanilla borrowing. Tier 2 bonds (Basel III-compliant subordinated debt — meaning bondholders get paid after senior creditors if things go wrong) count toward regulatory capital. AT1 bonds — Additional Tier 1 — are the spiciest: they're perpetual (no maturity date), can skip coupon payments, and can even be written down if the bank's capital ratio falls below a trigger. Investors demand a higher yield for that risk.
Why does this matter for your WACC? Each instrument carries a different cost of capital. Senior bonds are cheapest; AT1 is the most expensive. The CFO's job is to blend these in the right proportion to fund growth at the lowest blended cost — while keeping regulators happy on capital adequacy.
SBI raised only ₹13,551 crore via Tier 2 bonds all of FY26. This year's plan is nearly 4× bigger. When India's largest bank goes this hard on the debt capital markets, the cost of credit across the system follows. Watch this space.
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