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SBI eyes overseas acquisitions

SBI is aggressively looking at acquiring banks overseas and could spend up to $100 million on a single deal.

india Updated: Feb 24, 2006 16:51 IST

State Bank of India is aggressively looking at acquiring banks overseas and could spend up to $100 million on a single deal, Chairman AK Purwar said on Friday.

SBI, India's largest commercial bank, was also keen to expand in the South Asian region by buying a bank in neighbouring Bangladesh and opening branches in Pakistan, he said.

"Pakistan is the only SAARC (South Asian Association for Regional Cooperation) country where we don't have a branch," he told reporters.

Last year, SBI had bought three small banks -- Indonesia's PT Bank IndoMonex, Mauritius-based Indian Ocean International Bank and Giro Commercial Bank Ltd in Kenya.

Purwar said the bank planned to raise about Rs 20 billion ($450 million) in the year to March 2007 as subordinate debt as demand for loans remained strong.

"There is a huge credit growth in the economy and all sectors are seeing good demand (for credit)," he said.

Purwar also said there was upward pressure on interest rates and money in the banking system was tight.

"We will wait for the budget and take a call, but there is a hardness in the interest rate market and liquidity pressure," he said in response to a question about any revision in interest rates.

Earlier in the week, the bank raised home loan rates by 25-75 basis points.

Cash supplies have dwindled in the past two months due to a $7.3 billion redemption of an expatriate deposit scheme, sluggish government spending and robust corporate demand for bank loans.

Inter-bank overnight rates were dealt at about 7 per cent, unchanged from the previous day, and above the 5.5 per cent range where they trade when funds with banks are ample forcing banks to raise lending and deposit rates.

Shares in SBI were 2.5 per cent higher at RS 874.20 in a weak Mumbai market.

First Published: Feb 24, 2006 16:51 IST