New delhi, February 02: Largest lender of the country State Bank of India is planning to raise Rs 15,000-Rs 20,000 crore through equity within the next two years to meet its capital requirement.
“More than half of this amount would be sourced from internal accruals, while the rest would be secured from the market,” SBI chairman and managing director OP Bhatt said.
Talking about the bank’s capital requirement over the next five years, he said the bank will require around Rs 50,000 crore .
“Capital raising depends on many factors. Firstly, the state of the market and then need for budgetary provision if the government decides to issue capital to us,” he said in Murshidabad district of West Bengal.
SBI is currently sitting on excess liquidity to the tune of Rs 75,000 crore (as on December 31, 2009).
“This is exerting pressure on margins and this pressure would be there for the next two quarters,” Bhatt said.
According to him, SBI is hoping to shed bulk deposits to the tune of Rs 15,000-20,000 crore in the next two quarters . He also indicated that SBI Life’s public offer is expected within the next 1-2 years.
He further said SBI is in an advanced stage of foraying into wealth management business, possibly in the form of a joint venture, and is in talks with two foreign entities for that.
“We need expertise of a foreign partner and it could be either in the form of a joint venture or could even be through a memorandum of understanding,” he said.
SBI is also expecting government’s approval soon on the proposed merger with the State Bank of Indore and the bank will be in a position to implement the proposal within a week after getting the government’s approval. “The merger would just be a technical restructuring,” Bhatt said.
Another public sector bank, Union Bank of India, opened its sixth branch in Murshidabad district on Sunday, along with a village knowledge center and an entrepreneurship development center in association with SIDBI.
—Agencies