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State Bank of India (SBI), the country's largest lender, plans to raise up to 100 billion rupees ($1.22 billion) through the sale of infrastructure bonds maturing in 15 years, three bankers said on Thursday.

"The bank has taken internal approvals for the issue and bidding is expected in the last week of July," one of the bankers said.

The proposed bond issue will have a base size of 50 billion rupees, with an equivalent greenshoe option.

SBI did not reply to a Reuters email seeking comment.

ICRA has assigned a AAA rating for SBI's infrastructure bonds.

Last week, the state-backed lender raised only the base amount of around 31 billion rupees in its first perpetual bond issue for fiscal 2024 as investors sought higher returns than the bank was willing to offer. The total issue size was 100 billion rupees.

"SBI's infra bond issue will see demand from insurance companies, pension and provident funds. There is a dearth of supply of high-quality papers at the longer end in recent times, and hence this issue will be well bid," another banker said.

SBI last issued infrastructure bonds in January when it raised 97.18 billion rupees through 15-year bonds at 7.70%.

The latest issue comes as lenders are increasingly raising money through bonds to fund credit growth. In June, Kotak Mahindra Bank raised 19.85 billion rupees via infrastructure bonds maturing in seven years at a coupon of 7.55%.

Infrastructure bonds, with a maturity of at least seven years, are issued to finance long-term development projects. Banks do not have to maintain cash reserve ratio and statutory liquidity ratio on these bonds, according to Reserve Bank of India guidelines.