State Bank of India, the country's largest lender, on Monday said its central board has approved a proposal to raise up to Rs 14,000 crore by issuing Basel-III compliant bonds.

The bonds are proposed to be raised in Indian or US currency.

"The central board of the bank at its meeting held today on June 21, 2021, accorded approval for raising capital by way of issuance of Basel III compliant debt instruments in USD and/or INR during FY22," SBI said in a regulatory filing.

Under this, the bank plans to raise fresh additional tier I capital up to an amount of Rs 14,000 crore subject to the government of India concurrence, it added.

Tier 1 capital is a bank's core capital, which includes disclosed reserves that are present on a bank's financial statements and equity capital. A lender uses tier I capital to function on a regular basis and it forms the basis of a financial institution's strength.

To comply with Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.