Mumbai: Indian banks are tapping the overseas debt market in a big way with the majors likes SBI, IDBI and Punjab National Bank, already lining up plans to borrow over Rs7,500 crore this year.

The State Bank of India, the country's largest bank, will raise Rs3,075 crore through long-term debt in the overseas market by March, to meet lending and capital requirements.

IDBI is planning to raise up to Rs1,500 crore in lower Tier II bonds to support credit needs in the next 12 months. It also plans to shore up capital to meet Basel II norms and supplement capital bonds redemption. The bank has raised Rs1,418 crore as Tier II capital during the current financial year.

Among other large public sector banks, Punjab National Bank had last month proposed to raise Rs1,000 crore through issue of bonds in the overseas market. Bank of India is also expected to raise funds in the current year through overseas bond issue.

Bank of India informed the Bombay Stock Exchange (BSE) last month that it would raise Rs2,000 crore through issue of Tier I and Tier II bonds on private placement basis. BoI would raise up to Rs382.5 crore by way of Tier I capital and Rs1,200 crore through Tier II bonds. The bank did not specify the timing of these bonds.

Indian banks are also reported to be tapping the loan syndication market in a big way. While foreign banks still top the tables, ICICI Bank and SBI have emerged as number three and number five with 13 deals ($1.01 billion) and with 17 deals ($951 million), respectively, according to Basis Point, a journal that tracks loan syndication deals.

New players like UTI Bank (which started its Singapore branch last year) are also getting into the play.

However, these deals also include loans to corporates and financial institutions. Banks were major issuers in the loan syndication market. They normally raise loans for one or three years unlike corporates which raise loans for longer tenure of five years and above. Other than expansion, corporates have also been borrowing for acquisitions.

Indian corporates had made $8.5 billion of overseas acquisitions which was double that of the previous year. And, with interest rates in India going up, corporates are most likely to tap the overseas market. If the coming budget removes the withholding tax, then oversees loans would become cheaper and more attractive to borrowers.