• The State Bank of India (SBI) board has approved a proposal to raise ₹25,000 crore through the issuance of Basel-III compliant Tier 1 and Tier 2 bonds.
• The funds will be raised in Indian Rupees (INR) or US Dollars (USD), depending on market conditions.
Understanding Tier 1 & Tier 2 Capital:
Tier 1 Capital:
• The core capital of a bank, including shareholders' equity and retained earnings.
• It acts as the primary financial cushion for absorbing losses.
Tier 2 Capital:
• Includes revaluation reserves, hybrid capital instruments, subordinated debt, general loan-loss reserves, and undisclosed reserves.
• It provides additional security beyond Tier 1 capital.
Study Notes
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