KOLKATA: The State Bank of India is weighing several combinations to raise Rs 20,000 crore for the next three years while its net interest margin improved to 3.6% for the quarter, exceeding its expectation by 10 basis points . The country's largest lender has so far failed to get the government's clearance for the proposed rights issue of Rs 20,000 crore.
SBI has preferred this option over other instruments since early 2010 as it did not want to dilute the government's stake but is now forced to look at other options. The bank's capital raising issue may be discussed at a special board meeting on August 6, which will be addressed by finance minister Pranab Mukherjee. Speaking at a Ficci event here, SBI chairman Pratip Chaudhuri said:
"The government is committed to SBI and acknowledged its contribution towards nation building." He expects to complete fund raising by March 2012. The bank will soon place three separate fund-raising structures with the government for its consent. Mr Chaudhuri said the bank is also open to a combination of rights issue plus private placement of equity, or even rights issue plus a FPO.
The SBI chairman said the bank needs Rs 47,000 crore to support business growth in the next three years and Rs 20,000 crore out of this requirement will be raised from the market. He said SBI looks to plough back Rs 9,000 crore from profit every year till 2014. SBI expects to restore "normal profit" from the third quarter.
The bank will need to continue with making high provisions in the first quarter too as per RBI guidelines. Yet, Mr Chaudhuri said the Q1 profit would be better backed by a better interest rate margin. "Our margin would be 3.6%, more than our guidance of 3.5% for the first quarter. This could offset the impact of higher provisioning," he said.
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