New Delhi: State Bank of India (SBI), the country’s biggest bank, is planning to raise capital through public offer of shares in the market and is awaiting the nod of the Finance Ministry to meet additional capital requirements for business growth and statutory requirement.
“We are under discussion with the Finance Ministry and awaiting clearance from them. Once we get clearance, capital would be raised within 90 days,” SBI chairman O. P. Bhatt told reporters on 5 October.
The bank is expected to raise around Rs10,000 crore either through follow on public offer (FPO) or rights issue. Government’s stake would be diluted if the bank brings out a public offer but will remain unchanged in case of rights issue.
Bhatt was in the capital to participate in the meeting called by Finance Minister P Chidambaram to discuss credit needs of the auto, auto-component and paper industries.
Admitting that credit growth of the bank was marginally lower than the target of 23%-24% till September end, he said,“ Once the sanctioned loans are disbursed, it is expected to go up. We are hopeful to achieve up to 25% credit growth this fiscal.”
He, however, added that the capital would be raised from the market even if the credit growth remained lower than the target rate.
On the interest rate outlook, he said, “Interest rates are likely to remain stable at least till the mid-term review of monetary policy by the RBI” scheduled to be announced on October 30.
The SBI Chairman, however, said that after the Asset Liability Committee Meeting, which is coming up shortly, the banks will take a call on “interest rates” for various sectors.
On the possibility of bringing down interest rates for auto finance, Bhatt said,“ Every festival season, we come out with some scheme or the other, not only for the auto sector but also for white goods and consumer products. This time around, it would not be any different.”
Referring to the demand of industry to bring down interest rates, he said the bank will try to work out ways and means to meet the demand of sectors such as automobile, auto components and paper industries which have witnessed lower growth.
Last week, Bhatt had said that SBI could give discount to new housing credit seekers in the festive season and might cut home loan rates.