Mumbai: The country’s largest commercial bank, State Bank of India, is likely to go for stake sale by December as a part of its efforts to mobilise Rs50,000 crore ($12 billion) in the next three years.
“We are awaiting amendment to the SBI Act... By December, we should be able to go for stake sale,” chairman O P Bhatt told reporters here on 28 June.
The bank will also form a non-banking financial company (NBFC) to manage its insurance and asset management businesses, for which details are being worked out, Bhatt said, adding that the NBFC will subsequently be listed.
Bhatt also said that issue of preferential shares was yet another option for raising capital and this would be also considered once the amendment was through.
On the bank’s inorganic growth plans, Bhatt said: “We have no plans as of now to acquire any bank. As far as our associate banks are concerned, the bank will look at both IPOs for its associates as well as mergers.”
“We are awaiting Presidential assent for the amendment and once that is done in the next three-four months, the details will be worked out,” he said, adding that the requirement of capital for its subsidiaries was around Rs8,000 crore.
Bhatt said SBI would be forming joint venture for the NBFC and was looking at both Indian and overseas partners for the same.
Regarding its listing, he said it would not sell more than 10% as the main purpose of the sale would be discovery of prices.
Elaborating capital mobilisation for SBI, Bhatt said the bank would await the government and RBI approval after the necessary amendments to the SBI Act.
Bhatt said this year the bank would need Rs15,000 crore, of which it has already raised around Rs5,000 crore.
The bank has raised Rs2,500 crore in tier-II and $225 million (Rs2,600 crore) by way of tier-I capital, he said.
The SBI chairman also said the bank would be requiring Rs5,000 crore in FY 08 and an additional Rs8,000 crore in FY 09 to meet Basel II.
On the plans to set up a pension fund to manage the new pension scheme of central government employees, Bhatt said that SBI was among the four short-listed firms by the regulator PFRDA to conduct the business.
The bank was awaiting PFRDA nod to roll out the pension fund and he expected this to happen in a couple of months.
After seeing a fall in its market share in recent years, the bank was on the road to recovery with its market share stabilizing at over 15%, Bhatt said, adding that its capital adequacy was now “comfortable” at 12.34%, of which 8% came through Tier I capital.
As far as SBI’s associate banks were concerned, all of them were comfortable, averaging 12% in capital adequacy, he said.