State Bank of India (SBI) chairman, said the bank is looking at tapping the retail bond market next year with a 10-year issue, although the initial issue size may be as small as Rs 50-100 cr.
“If it turns out well, we may think of raising more money through this route. But we do not require capital immediately, it is only one of the option we are looking at,” he said, speaking at the sideline of a seminar organised by Confederation of Indian Industries (CII).
State Bank of India (SBI) chairman indicated that SBI would prefer rights issue route to strengthen its capital base. “I would want the government to continue to hold a majority stake in the bank,” Chairman OP Bhatt said when asked about capital raising plans. The comment made by Mr Bhatt is in the context of the proposed amendment in the SBI Bill which allows the government to dilute its stake in the bank to 51 percent, in line with other PSU banks. Currently, the government cannot lower its stake up to 55 percent. The government is the largest shareholder with 59.4 percent stake. SBI had raised Rs 16,736 cr thought the rights issue in 2008, wherein the government had subscribed Rs 10,000 cr.
In the interim, Mr Bhatt said the bank has not yet finalised the next associate bank it will acquire after State Bank of Indore. RBI has cleared the SBI proposal to merge its associate bank State Bank of Indore with itself but it is awaiting approval from the government. Following the approval, the board of SBI and State Bank of Indore has to approve the merger. SBI has six associate banks (including State Bank of Indore) and it has earlier announced plans to merge all associate banks with itself.
SBI has already merged two of its associate banks with itself — State Bank of Saurashtra and SBI Commercial and International Bank with itself. “No other bank is lined up now,” said Bhatt, while declining to give the swap ratio.
With regards to interest rates, Bhatt said he does not expect interest rates to rise in the beginning of the next fiscal. On surplus liquidity, he said excess liquidity has fallen to an average of Rs 50,000 cr now against Rs 75,000 cr in December 2009. The share of high-cost deposits has fallen to 3 percent of the total deposits.
On credit offtake, Mr Bhatt said the bank has been sanctioning close to Rs 2,500 cr every month under the Special SBI Home Loan Scheme where the borrower can avail of loan at a fix rate of 8% for the first year and rates are linked to prime lending rate in subsequent years.
The special home loan scheme will end by March 31 and he said the bank will take a call on whether or not to extend the scheme on March 31. But at the same time, he added that the bank has not seen much improvement in credit offtake this month.




