SBI may consider fund raising through FPO, QIP next fiscal

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oi-Sneha

By Sneha B K

Published: Monday, March 12, 2012, 9:51 [IST]

The country's largest lender State Bank of India (SBI) today said it would explore the possibility of raising capital through a public offer or from institutional investors next fiscal even as it is getting Rs 7,900 crore support from the government by end of this month.

"In the next fiscal beginning April 2012, we would discuss with the government for dilution of its stake through FPO [follow-on-public offer] or QIP [qualified institutional placement]," State Bank of India (SBI) Chairman Pratip Chaudhuri said here.

"We should be understanding that government cannot keep on pumping in capital [in public sector banks] without any limit. So, we would explore the possibility of FPO or QIP next fiscal after due consultation with the government," he said.

For raising the Tier I capital of the bank, the government has agreed to infuse capital to the tune of Rs 7,900 crore by March 31, 2012.

Post capital infusion, the government holding in the bank would rise to 62%, from about 59% at present.
As per the existing regulation the government holding cannot come down below 51%.

So there is headroom for stake dilution of about 11% in the bank, he said, if the government permits, the bank may go in for raising capital.

Terming 0.75 percentage cut in Cash Reserve Ratio (CRR) a week ahead of the mid-quarterly review of monetary policy on March 15 as a "surprise," he said this would help easing liquidity pressure on the system.

"I don't think that RBI would take further action the policy review [on March 15]," he said.

The apex bank slashed CRR, the percentage of deposits that banks have to keep with the RBI, from 5.5% to 4.75% on March 9. With this, the central bank infused Rs 48,000 crore into the economy.

On the issue of fresh lending to Kingfisher Airlines, he said, "there is need for fresh capital. I think the management of the airline is alive to the issue and would make all effort to get fresh capital."

Asked if SBI participated in the recent ONGC share sale, Chaudhuri said the bank did participate in the Offer for Sale.

He, however, refused to divulge details of share purchase made by the bank.

Of the 420.4 million shares auctioned earlier this month, state-owned insurance giant LIC picked up 377.1 million shares in ONGC.

PTI