SBI rights issue by fiscal end: Chaudhuri
Country's largest lender State Bank of India today said it will come out with its rights issue this fiscal itself, but maintained that it is well capitalised to see through this fiscal if the government delays giving its go-ahead for the proposed Rs 21,000-crore issue.india Updated: Aug 23, 2011 19:17 IST
Country's largest lender State Bank of India on Tuesday said it will come out with its rights issue this fiscal itself, but maintained that it is well capitalised to see through this fiscal if the government delays giving its go-ahead for the proposed Rs 21,000-crore issue.
"The government is very positive and actively considering the rights issue. It will come out in this fiscal. We are in the second quarter, (it may come) may be in the third or fourth quarter," chairman Pratip Chaudhuri told reporters on the sidelines of a FICCI-IBA event in Mumbai.
The nation's largest lender has been trying to shore up its capital through an over Rs 21,000 crore rights issue since February last year. But the government has not given its go-ahead so far and considering the tight finances of the Central Exchequer it is has been speculated that it may not happen this fiscal too.
The government has not earmarked any money in the budget for this purpose this year, too. Since the Centre holds 59.4 percent stake in the bank, it will have to shell out over Rs 12,000 crore for the rights issue or issue bonds as it had done last time the bank came out with a rights issue.
However, when asked about the bank's capital adequacy and if it can achieve its targeted 16-19 percent credit growth with the current reserves this fiscal, Chaudhuri said, "yes, total capital adequacy of ours is 11.60 percent. Even if we have 20 percent (credit) growth, it will be alright."
To a specific query if the bank can see through the year without the funds from the rights issue coming in, he said, "Yeah..We are well capitalised for this year."
Earlier in the day, SBI managing director and chief financial officer Diwakar Gupta had said the bank can manage without the rights issue this fiscal by depending on other routes of capital augmentation like retail bonds.
"Its a crisis situation if we don't get the capital next fiscal. But we have a Plan B to sustain this fiscal. In 2013, we will definitely need fresh capital," he said.
Though earlier the SBI top brass has said it is targeting to raise around Rs 21,000 crore from the issue, Chaudhuri today said the exact amount to be raised is still under discussion.
On the overseas borrowing front, Chaudhuri said the bank will not be hitting the markets next month as was planned earlier due to risk aversion in the market.
The bank is through with its higher provisioning which had hit its bottomlines for the past two quarters, Chaudhuri said, adding profitability in the the next quarters should be better.
Gupta said the bank will have to provide for only Rs 550 crore on account of counter-cyclical provisions besides the routine ones and is done with other items like pension liabilities, PF etc.