The Economic Times reported on September 5, citing people familiar with the matter, that banking giants HDFC Bank and State Bank of India (SBI) plan to jointly raise Rs 10,000 crore through the sale of perpetual bonds this week.

The fundraising campaign showed a pickup in demand for credit in the world’s fifth-largest economy, as bankers expect lending to rise by more than 10% year-on-year this financial year.

Perpetual or Additional Tier 1 (AT-1) bonds are perpetual debt instruments used by banks to expand their core equity base to comply with Basel III norms. These bonds were introduced by Basel to protect savers after the global financial crisis. These risks are relatively high as investors (mostly institutional players) could lose their entire capital in 2020 like Yes Bank.

Most of these bonds include fifth-year call options.

According to the report, SBI plans to raise up to Rs 7,000 crore and is in talks with India’s LIC and Indian Unit Trusts (UTIs). The ET report highlighted that private insurer were also approached. The bank intends to bid about 7.7-7.8%.

It noted that HDFC Bank hopes to raise up to Rs 3,000 crore on September 6, when its bonds will be bid on the stock exchange platform. ET quoted traders as saying that independent provident funds, large banks and family offices are likely to buy these instruments, which are expected to provide returns of 7.8-7.95%.

Last week, the Bank of Baroda issued AT-1 bonds worth Rs 2,474 crore, yielding 7.88%.

According to the latest data from the Reserve Bank of India (RBI), credit offtake by banks rose 15.3% year-on-year in the two weeks to August 12, up from 5.5% a year earlier.

In absolute terms, banks’ overall outstanding advances stood at Rs 124.3 crore as of August 12, an increase of Rs 16.5 crore compared to the past 12 months.