State Bank of India (SBI) has entered the social loan market by raising $1 billion from overseas markets, the bank announced on Tuesday. The loan is the largest ESG (Environmental, Social and Governance) loan raised by a commercial bank in the Asia Pacific region and the second-largest social loan globally. The loan consists of $500 million of primary issue and an equal amount in greenshoe option, which allows the issuer to sell more shares than initially planned.
The loan will be used to further lend to microfinance institutions and self-help groups, which are involved in social sector funding. SBI said that the issuance of its first social loan is an embodiment of its commitment to ESG practices, which aim to make a positive impact on the environment, society and stakeholders. The bank also said that this is its first syndicated loan in the past five years.
The transaction was facilitated by MUFG Bank and Taipei Fubon Commercial Bank, who acted as joint social loan coordinators. MUFG Bank was also the lead social loan coordinator. The loan attracted participation from banks across Taiwan, Japan, China and the Middle East, ensuring a full subscription, including $500 million of the greenshoe option.
SBI chairman Dinesh Khara said that the bank is committed to conducting its business operations with the highest standards of ESG practices. He added that the bank will continue to explore opportunities in the ESG financing market, which is expected to grow rapidly in India and globally.
The Reserve Bank of India (RBI) and the central government are working towards shaping up India’s green financing guidelines. Earlier this month, RBI governor Shaktikanta Das said that the central bank is working on unveiling guidelines on green financing, including special deposits for green projects. He said that these would be the first set of measures that will be aimed at addressing the impacts of climate change on the financial system.