The State Bank of India will be raising Rs 10,000 crore ($2.5 billion) by the year-end either through a follow-up public offer or a rights issue. Talking to the media on the sidelines of the FICCI-sponsored conference on global banking here on Wednesday, SBI chairman OP Bhatt said that the fund raising exercise would begin in December this year. Bhatt said that no investment bank had been identified for the sale as yet.
On the merger of the State Bank of Saurashtra (SBS) with his bank, Bhatt said, ?The process has just begun. We will learn from the exercise and gradually proceed similarly with the other associate banks of SBI.? He, however, did not specify any timeframe for that.
When asked about the formation of the proposed holding company, he said that SBI had sought a recommendation from the Reserve Bank of India (RBI) on the formation of such a company. ?When RBI gets back with a favourable response, the bank would take about three months to set up a holding company,? he added.
Prior to this, while addressing the inaugural session of the conference on ?Global Banking: Paradigm Shift?, Bhatt said, ?At a time when the country’s GDP has been growing at a rate over 9% for the last two years combined with over 30% credit growth in the last four years, we need to see whether non-performing assets in absolute terms are coming down.?
When the question – whether the present rate of economic growth was sustainable ? was raised, Bhatt said that the moot question was how to manage the transition. He emphasised that the banks in the country cannot have the much-desired growth without consolidation. SBI has recently concluded the process of consolidation of one of its associates, State Bank of Saurashtra.
Banks would need more capital to keep up with pace of economic growth, said Sanjay Sachdev, country manager at Shinsei Corporate Advisory Service.