New Delhi: State Bank of India (SBI), the country’s biggest lender, will come out with a follow-on public offer this fiscal to raise funds.
“Some time this fiscal”, SBI chairman O.P. Bhatt told reporters, when asked for a time- frame for the public offer.
The bank had earlier said it was planning to offload about 5% of promoters’ stake to raise its capital adequacy ratio (CAR). As of now, the Reserve Bank of India (RBI) holds a 59.73% stake in SBI, which the government intends to purchase towards the end of June.
SBI is also planning to curtail its credit growth by about 3% this fiscal following directions from the finance ministry given at a meeting on Thursday. “We are looking at 25% credit growth this financial year against 28% last fiscal,” Bhatt said.
At a meeting with public-sector bankers earlier in the day, finance minister P. Chidambaram said credit growth in the industry, which has touched 30%, needed to be moderated.
He asked bankers to slow credit to high-risk sectors such as commercial real estate, capital markets and systemically important non-banking financial companies.
Bhatt said credit growth in the industry was moving down. “I am sure we will have more moderation this fiscal,” he added.
The SBI chairman said the hardening interest-rate cycle in the system has either peaked or is nearly peaking. When asked about the central bank’s liquidity tightening, he said there was enough liquidity in the system.
After RBI hiked the short-term lending rate (repo rate) and the cash reserve ratio (CRR), the amount that commercial banks are required to maintain with the central bank, many banks, including SBI, hiked their lending rates.
Other public sector banks also expressed concern about the mismatch between asset mobilization and credit growth, and are planning to cut credit exposure to meet the Basel II norms.
While Canara Bank is planning to maintain credit growth at the existing level of 24%, Bank of India (BoI) and the United Bank of India (UBI) also indicated they would curtail credit exposure to meet a CAR of 9%.
“Our credit growth for fiscal 2006-07 at 24% is below the market average and we would try to ensure that credit growth stays within the limit, this year as well,” Canara Bank chairman and managing director M.B.N. Rao said.
BoI CMD M. Balachandran said the bank is planning to curtail its credit, but home loans and education loans would be insulated from any type of “tinkering”.
P.K. Gupta, CMD at UBI, also indicated that while personal loans would not be affected much, corporate and industry loans, as well as loans for sectors like real estate, may have to bear the brunt of the tightening measures.