State Bank of India (SBI), the country’s largest public sector lender, is set to launch India’s first rupee-denominated perpetual bond issue of 2026, according to a Reuters report. The bank plans to become the first Indian lender to tap the perpetual bond market this year by raising ₹5,000 crore (around $518 million) through Basel III-compliant Additional Tier 1 (AT1) perpetual bonds. According to bankers familiar with the matter, the fundraising is expected to take place within the next two weeks. The proposed issuance will mark the first AT1 perpetual bond issue by an Indian bank in 2026, reflecting SBI’s efforts to strengthen its capital base and support its future growth plans.
The proposed fundraising comes at a time when banks are focusing on strengthening their capital buffers to support rising credit demand and meet regulatory capital norms. SBI’s upcoming perpetual bond issue is expected to enhance its capital position while providing the financial flexibility needed to sustain future lending and business expansion. Here’s everything investors need to know about SBI’s upcoming perpetual bond issue.
SBI is planning to raise ₹5,000 Crore Through Perpetual Bonds
According to bankers familiar with the matter, SBI is planning to raise ₹5,000 crore (50 billion rupees) through rupee-denominated perpetual bonds within the next two weeks. The country’s largest public sector lender is reportedly in advanced talks with merchant bankers and institutional investors and is expected to complete the bond issuance before the Reserve Bank of India’s (RBI) next monetary policy announcement on August 5, 2026.
Although SBI has not officially confirmed the fundraising plan, market participants expect the bond issue to witness strong investor interest, backed by the bank’s solid credit profile, strong financial fundamentals, and leading position in India’s banking sector.
What Are Perpetual Bonds?
Perpetual bonds, also known as Additional Tier 1 (AT1) bonds, are debt instruments that do not have a fixed maturity date. Unlike traditional bonds, they do not require the issuer to repay the principal on a specific date. Instead, investors receive periodic interest payments, known as coupon payments, for as long as the bonds remain outstanding.
These bonds generally come with a call option, which gives the issuing bank the right to redeem them after a predetermined period, subject to regulatory approval.
Under the Basel III framework, AT1 perpetual bonds are classified as part of a bank’s regulatory capital. Perpetual bonds enable banks to strengthen their capital, maintain healthy capital adequacy ratios, and support future lending and business growth.
Details of SBI’s Proposed Perpetual Bond Issue
| Particular | Details |
| Issuer | State Bank of India (SBI) |
| Bond Type | Basel III-compliant Additional Tier 1 (AT1) Perpetual Bonds |
| Proposed Fundraising | ₹5,000 crore |
| Currency | Indian Rupee (INR) |
| Maturity | Perpetual (No fixed maturity date) |
| Call Option | Expected to be exercisable after 5 years, subject to regulatory approval |
| Expected Issuance Timeline | Within the next two weeks, as per reports |
Why Is SBI Issuing Perpetual Bonds?
Banks issue perpetual bonds primarily to strengthen their financial position while meeting regulatory requirements. SBI plans to use the proposed bond issue to support its long-term capital needs and future business expansion. The key objectives include:
- Strengthen the capital base without issuing new equity: Perpetual bonds enable banks to raise capital without issuing additional shares, helping them maintain existing shareholders’ ownership.
- Meet Basel III regulatory capital requirements: Since Additional Tier 1 (AT1) perpetual bonds qualify as regulatory capital under the Basel III framework, they help banks comply with capital adequacy norms given by the RBI.
- Support future credit and loan growth: A stronger capital base allows banks to expand lending activities, meet rising credit demand, and finance future business growth.
- Improve capital adequacy while minimizing shareholder dilution: By raising funds through debt instruments instead of equity, banks can enhance their capital adequacy ratios without reducing the ownership stake of existing shareholders.
Earlier in June 2026, SBI’s board approved a plan to raise up to ₹60,000 crore during the current financial year through various debt instruments, including infrastructure bonds, Basel III-compliant Additional Tier 1 (AT1) securities, and Tier II bonds. The proposed perpetual bond issue is part of this broader fundraising strategy aimed at strengthening the bank’s capital position and supporting its long-term growth plans.
Why is the SBI Perpetual Bond Issue 2026 Significant?
The SBI Perpetual Bond Issue 2026 stands out as a significant development for India’s banking sector and debt market for several important reasons:
- First such issuance in 2026: With the SBI Perpetual Bond Issue 2026, SBI aims to launch the first rupee-denominated perpetual bond issue by an Indian bank in 2026, setting the tone for debt fundraising in the domestic market this year.
- Revives momentum in the capital market: The SBI Perpetual Bond Issue 2026 marks a revival in activity within India’s bank capital market, following a relatively slow start to fundraising during the year.
- Shows stronger investor demand: The proposed offering reflects growing investor interest in bank capital instruments, particularly those issued by well-capitalised and highly rated lenders such as SBI.
- Reinforces SBI’s capital strategy: The SBI Perpetual Bond Issue 2026 highlights SBI’s focus on maintaining a strong capital base, meeting Basel III regulatory capital requirements, and supporting future lending and business growth.
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When Did SBI Last Issue Perpetual Bonds?
State Bank of India (SBI) last accessed the perpetual bond market in October 2024, when it raised ₹5,000 crore through Basel III-compliant Additional Tier 1 (AT1) bonds. The bonds carried a 7.98% coupon rate and featured a 10-year call option.
Following SBI’s issuance, the latest AT1 bond issue by another Indian bank came from Canara Bank in November 2025. The public sector lender raised ₹3,500 crore through Basel III-compliant AT1 bonds at a 7.55% coupon rate.
What Are the Risks of Investing in SBI Perpetual Bond Issue 2026?
1. Higher risk than traditional bonds: Investors considering the SBI Perpetual Bond Issue 2026 should note that banks issue AT1 bonds as subordinated debt instruments, making them riskier than senior debt securities during periods of financial stress.
2. Interest payments are not guaranteed: Under certain regulatory or financial conditions, the issuing bank may defer or skip coupon payments without being considered in default. This is an important risk to understand before investing in the SBI Perpetual Bond Issue 2026.
3. Potential capital loss: Investors in the SBI Perpetual Bond Issue 2026 may face losses if the issuing bank’s capital falls below the prescribed regulatory threshold because AT1 bonds absorb losses during periods of financial distress.
4. No fixed maturity date: Since perpetual bonds do not have a predetermined maturity, investors in the SBI Perpetual Bond Issue 2026 must rely on the issuing bank to exercise its call option for redemption.
What Does This Mean for Investors?
SBI’s proposed perpetual bond issue highlights the bank’s continued focus on strengthening its financial position and maintaining adequate capital to support future growth while meeting regulatory requirements. Given SBI’s strong credit profile, market leadership, and government backing, the proposed issue is expected to attract healthy participation from institutional investors.
For retail investors, this development also provides valuable insight into how large banks raise capital beyond conventional sources such as equity and deposits. While Additional Tier 1 (AT1) bonds can offer higher potential returns than traditional bonds, they also come with unique risks. Investors should carefully evaluate their features, risk profile, and investment objectives before considering such instruments.
Conclusion
SBI plans to make one of the most notable debt market transactions in India’s banking sector this year through its proposed ₹5,000 crore rupee-denominated perpetual bond issue. If the fundraising goes ahead as expected, it will mark the first Additional Tier 1 (AT1) perpetual bond issue by an Indian bank in 2026, underscoring SBI’s commitment to strengthening its capital base and supporting long-term business and credit growth.
Market participants and investors will closely track the bond issue’s pricing, investor demand, and launch timeline, especially with the Reserve Bank of India’s (RBI) upcoming monetary policy meeting approaching.
