1. SBI QIP: State Bank of India not to require government capital infusion for year

SBI QIP: State Bank of India not to require government capital infusion for year

Following India’s largest qualified institutional placement, capital adequacy ratio up 79 bps to 13.64%

By: | Mumbai | Published: June 10, 2017 6:46 AM
On reports that the bank has curtailed line of credit to some stressed telcos, managing director B Sriram said, “As regard to withdrawal of these unused line of credit to the telecom sector, we have not withdrawn any unutilised limit.” (Reuters)

State Bank of India (SBI) would not require government capital infusion for at least another year following India’s largest ever qualified institutional placement (QIP) of Rs 15,000 crore, chairman Arundhati Bhattacharya said on Friday. In FY16 and FY17, the government had infused Rs 5,393 crore and Rs 5,681 crore, respectively, into the bank. “We will not require government funds. At this point, we have not asked for capital and as per the plan we have put in place, we are quite comfortable on the capital front,” Bhattacharya said, adding that even excluding the QIP, the bank could have met all the requirements up to 2019 as per Basel III. Following the QIP, the capital adequacy ratio (for SBI consolidated) has increased by 79 basis points (bps) and is at 13.64%. The QIP book, she said, was oversubscribed and demand exceeded Rs 27,000 crore. According to her, 26% of the issue has been taken up by long-only foreign institutional investors (FIIs), 25% by domestic institutional investors (DIIs) excluding one large DII, and 11% by high-quality FII hedge funds. Around 38% of the mop-up was from Life Insurance Corporation (LIC). The government will now own 57.07% of SBI consolidated. The shares were issued at Rs 287.25. “We did not give LIC the full sum they asked for but 77% of their request. LIC’s stake in the bank post this investment would be 10.4%, up from 8.6%,” she explained. She added that in FY19, the bank has estimated a credit growth of 14% and 10-12% in FY18. Meanwhile, the government has been prodding state-owned banks to not entirely depend on its capital infusion and instead raise money from the equity market and even through sale of non-core assets. In FY18, the bank has not fixed a target for sale of non-core assets. Last year, it had a target of raising Rs 3,000 crore through sale of non-core assets and managed to raise Rs 2,662 crore. “This year we will only look at SBI Life IPO. For NSE, we will look at exiting some stake, not entirely,” she said.

On reports that the bank has curtailed line of credit to some stressed telcos, managing director B Sriram said, “As regard to withdrawal of these unused line of credit to the telecom sector, we have not withdrawn any unutilised limit.” He added that as a matter of general practice, the bank reviews all accounts irrespective of which sector they belong to, including telecom.  Bhattacharya explained that SBI has a cancellability clause for unutilised limits so that it does not unnecessarily block capital. Its telecom exposure is around 1.4% of its total fund-based book or Rs 18,000 crore and at any given time, about 70-75% is utilised.  She added that the bank is yet to decide on a board policy for reviewing credit limits. “Once the board policy is in place we can give you a better idea. But more or less we continually look at all the sectors and continually rate all the sectors as to which sectors are good,” she said.

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