SBI Sanctions ₹10,050 Crore Loan for DVC’s 1,600 MW Power Project

On September 12, 2024, the State Bank of India (SBI), the country’s largest lender, informed that it had sanctioned a project loan of ₹10,050 crore to Damodar Valley Corporation (DVC) for the development of a 1,600 MW Ultra Super Critical Thermal Power Project. 

This project will involve the construction of 2 units of 800 MW each, located in Koderma, Jharkhand. The loan is part of DVC’s larger borrowing plan to finance the project, which is expected to contribute significantly to the country’s power generation capacity.

This thermal power project has been identified by the Ministry of Power as one of the key projects for capacity addition by 2030, aligning with India’s long-term energy goals. The Ultra Super Critical technology used in this project is designed to improve energy efficiency and reduce carbon emissions, making it a significant step toward cleaner and more sustainable energy production.

SBI’s loan approval comes at a time when the bank has been maintaining a robust pipeline of corporate loans. Despite concerns about the overall slowdown in capital expenditure (capex) across industries, SBI continues to support large infrastructure and power projects. The bank’s consistent efforts to lend to corporate clients reflect its strong focus on expanding its loan book.

In June 2024, SBI raised ₹7,500 crores at a coupon rate of 7.42% through its first Basel III compliant Tier 2 bond issuance for FY 2024-25. The bonds were issued for a tenure of 15 years, with a call option after 10 years, further strengthening the bank’s capital base.

SBI’s financial performance for Q1 FY2025 also showcased stability, with a net profit of ₹17,035 crores, representing a 0.89% year-on-year growth. The bank reported a Return on Assets (ROA) of 1.10% and a Return on Equity (ROE) of 20.98%, along with a 5.71% year-on-year increase in Net Interest Income (NII).

On September 13, 2024, the share price of State Bank of India opened at ₹791.00, touching the day’s high at ₹795.00, as of 1:24 PM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.