Bank of India is in talks with state-owned insurer Life Insurance Corp of India (LIC) to raise 20 billion rupees in ($401 million) in upper Tier 2 bonds, banking sources with direct knowledge of the deal said.
"There is a dialogue on with LIC currently. They are willing to invest at least 20 billion rupees. The final amount will depend on what they decide," one source at SBI, India's largest commercial bank, said on Tuesday.
The official could not be named because he was not authorised to speak to the media.
Another banking source said SBI Capital Markets was the arranger to the transaction.
Market sources said they expected SBI to raise up to 30 billion rupees through Tier 2 bonds by March 31, the end of 2008/09 financial year.
"These will be upper Tier 2 bonds with 15-year maturity and a call option at the end of the 10th year," the SBI said.
LIC officials were not available for comment
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