SBI, Bank of Baroda eye first dollar bonds since RBI subsidy, sources say

State Bank of India and Bank of Baroda are poised to be the inaugural participants in the Reserve Bank of India’s subsidized hedging facility for foreign borrowings, aiming to raise roughly $1 billion via five‑year dollar‑denominated bonds, three sources said on Friday.

Each state‑owned lender is targeting about $500 million, the sources added.

Neither bank replied to Reuters’ request for comment. The sources asked to stay anonymous because they are not authorized to speak to the press.

“Both banks intend to finalize the issuance before month‑end, having waited for the central bank’s facility to be formalised,” one source noted.

The RBI announced this week that external commercial borrowings with an average maturity of at least three years by state‑run enterprises qualify for a swap facility at a fixed rate of 1.5 % per annum, compounded semi‑annually.

The facility reduces hedging expenses, making overseas borrowing less costly for firms and banks.

“With a 150‑basis‑point hedging discount, the effective all‑in cost for these lenders should be around 6.25 %–6.50 %, which is cheaper than their domestic borrowing rates,” another source said.

Merchant bankers anticipate inflows of roughly $15 billion to $20 billion through this channel over the next six months.

In September 2025, SBI, the country’s largest lender, raised $500 million via five‑year dollar bonds carrying a 4.50 % coupon payable semi‑annually.

SBI currently has dollar‑bond maturities of about $750 million due later this month and in July, whereas Bank of Baroda has no outstanding dollar debt, according to financial data aggregator Cbonds.

Published on June 12, 2026