"The Central Board at its meeting held today accorded approval to raise additional tier 1 (AT 1) capital by way of issuance of Basel III compliant debt instruments in USD and/or INR to the tune of Rs 8,000 crore from domestic/international market including masala bonds," the bank said in a regulatory filing.
Masala bonds are rupee denominated specialised debt instruments that can be floated in overseas markets only to raise capital.
State Bank of India (SBI) said it has time limit till March 2018 to raise the funds.
Banks in India have to comply with the global capital norms under Basel III by March 2019, three months later than the internationally agreed time frame by January 2019.
Basel III reforms are the response of Basel Committee on Banking Supervision (BCBS) to improve the banking sectors ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill over from the financial sector to the real economy.
Following the global financial crisis of 2007-08, during the Pittsburgh summit in September 2009, the G20 leaders committed to strengthening the regulatory system for banks and other financial firms.
They aimed at implementing strong international compensation standards aimed at ending practices that lead to excessive risk-taking, to improve the over-the-counter derivatives market and to create more powerful tools to hold large global firms to account for the risks they take.
As a result of this Basel II replaced Basel III reforms on capital regulation.
Stock of SBI closed 0.85 per cent lower at Rs 314.15 on BSE.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)