State Bank of India has decided to shelve its plans to raise funds through bond issuance this fiscal year, prompting a fall of nearly 0.69% in its stock price to close today at 722.70 per share.

The bank has taken this decision due to elevated bond yields, despite a policy rate cut and hefty liquidity infusion by the Reserve Bank of India (RBI).

SBI had planned to raise up to Rs 15,000 crore (approximately $1.7 billion) through bond sales before the end of March. The country's largest lender will now tap the market in the next financial year.

The yields have stayed persistently high for the last several weeks.

Despite the RBI cutting the policy repo rate by 25 basis points and infusing significant liquidity, yields on India's AAA-rated 10-year corporate bonds have risen by 15 basis points since early February. 

SBI assessed its asset-liability position and despite having the board approvals, decided not to go through with the bond issues for now, Reuters reported quoting a source.

The bank will look at its funding requirement afresh in the next fiscal year, the person said.

SBI's planned bond issues included Rs 5,000 crore through Basel III-compliant additional Tier-I perpetual bonds and Rs 10,000 crore through 15-year infrastructure bonds.

The bank had raised Rs 5,000 crore at 7.98% in October via perpetual bonds.

Meanwhile, other state-run lenders such as Bank of India, Punjab National Bank and Bank of Maharashtra raised an aggregate of Rs 7,252 crore through infrastructure bonds in February, though this was just over half of what they had intended to raise.

The stock is now almost 21% away from its 52-week high of Rs 912.10 achieved in June 2024.