SBI will not require fresh capital for two years after its forthcoming R11,500-crore qualified institutional placement goes through, and any overseas bond sale is expected only after the QIP.
"That (government infusion through a preferential issue followed by the QIP) is the process we are going to follow this year and it will see us for the next two years," SBI chairperson Arundhati Bhattacharya told PTI in an interview. After QIP, for which SBI received shareholders nod earlier this week, government holding in the bank will go down to 58%, she said.
"This will take the government stake to 58%. Thereafter, whether they will put money again and dilute again, whether they will dilute below 58%, I do not have any (answer)... It is for the government to decide," said Bhattacharya, who took over as the first woman chief of the state-owned lender in October. She declined to comment on whether the bank will adopt the preferential allotment and QIP routes to remain adequately capitalised to meet the Basel III capital needs.
The government had promised to infuse R2,000 crore through a preferential allotment of shares as part of its R14,000 crore recapitalisation of the public sector banks this fiscal. It will be followed by a QIP issue of R11,500 crore, which is slated to be completed by March.
Under the stricter Basel III capital requirement, SBI will need around R2.3 lakh crore in additional capital by March 2018 (when the Basel III norms are fully implemented). Of this, R1.5 lakh crore is needed in core tier I capital, the bank's then CFO Diwakar Gupta had said last July.
While the money raised from the QIP, FPO and preferential issues will form the core tier I, or equity, capital, the bond sales strengthen the tier II capital. The bank had on Thursday raised R2,000 crore in domestic bond sale.
On its $10 billion medium-term notes programme, under which it plans to raise money by issuing bonds in global markets, Bhattacharya hinted that there may not be any activity this fiscal. The bank had raised $800 million last February as part of this. So far, it has