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Wednesday, February 24, 2010

SBI may raise up to Rs 20,000 cr via rights

State Bank of India plans to raise Rs 10,000-20,000 crore in the next fiscal through a rights issue and is in discussion with the Government, its principal shareholder, said Mr O.P. Bhatt, Chairman.

“We need to raise equity in the next fiscal. We have a ceiling of Rs 20,000 crore. We may raise anywhere between Rs 10,000 and Rs 20,000 crore in the next fiscal,” Mr Bhatt said, while speaking to reporters on the sidelines of the CII Banking Tech Summit, here on Wednesday.

However, he pointed out that the bank has no immediate requirement of capital as it is fairly well capitalised with a capital adequacy ratio of 14 per cent.

Mr Bhatt expects the Government to make some announcement about the fund raising in the Budget on Friday.

Over the next five years, the bank would require Rs 40,000-50,000 crore. However, the timing will depend on the group's requirement for funds and the prevailing market conditions. SBI would need funds for any acquisitions it may go in for in the future or to meet the requirements of its subsidiaries, including the insurance subsidiaries.

“In the next five years, in addition to Tier-II capital and retained earnings, we may require Rs 40,000-50,000 crore. But this number could change,” Mr Bhatt said.

“If we can raise even half of this in the next 12-18 months, it will be great,” he said.

On spends to build IT infrastructure, Mr Bhatt said that 60-70 per cent of the bank's capital expenditure is on account of IT. He pointed out that the bank will invest thousands of crores of rupees in the coming years to build up its IT infrastructure though he declined to put a specific number to the future spends.

SBI is installing 1,000 ATMs every month. Necessary infrastructure has to be set up for mobile banking. It is also undertaking a data warehousing project. It also plans to establish a gateway to integrate all the payments process. Expenditure will also be incurred to upgrade the bank's network and set up risk management practices, Mr Bhatt said.

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