"It would be an independent joint venture with a foreign partner getting a 26 per cent equity at a premium for the bank's brand equity," he said.Vaidya added that SBI was already in the process of shortlisting consultants who will help it in the selection of the foreign partner. He said that the bank will first enter the life insurance sector and then general insurance.Vaidya said the bank planned to enter life insurance since it had synergies with the life insurance business. SBI will select between 500 and 1,000 branches for conducting the insurance business.

The chairman said that privatisation was the only option for SBI to meet the capital adequacy norms if the government was not in a position to support it for this purpose.

He said that SBI was working on a strategy for becoming a private bank through RBI rights renunciation. The privatisation plan would soon be placed before the government as the latter had given enough indications of its inability to bring in additional funds for meeting the capital adequacy ratio of the bank of the size of the SBI, said Vaidya.

The capital adequacy ratio of SBI as of now is 12.51 per cent against the prescribed 12 per cent. "If we have to meet our growth plan target we need additional equity which could be possible through dilution of RBI stake," he said.

Unlike in other banks, the government has a holding in SBI through RBI which in turn has a 59.74 stake in it. For privatising the bank, the government would need to amend the SBI Act which provides that the government holding cannot be less than 55 per cent and the foreign holding more than 20 per cent.