The Hindu : Business : SBI likely to tap market next fiscal

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Friday, Dec 08, 2006
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SBI likely to tap market next fiscal

Special Correspondent

Awaits SBI Act amendment; enters into MoU with London School of Economics

NEW DELHI: State Bank of India (SBI) is likely to go in for a public issue in the next fiscal after the majority ownership of the bank is transferred from the Reserve Bank of India to the Central Government.

Speaking on the sidelines of the London School of Economics (LSE) Asia Forum here on Thursday, SBI Chairman O. P. Bhat said the bank was likely to raise capital through a public offer of shares and was awaiting the amendment of the SBI Act.

In the proposed amendment, for which Cabinet approval has already been given, the minimum equity holding for the Government or the RBI will be brought down from 55 per cent to 51 per cent on the lines of other public sector banks. At present, the RBI holds 59 per cent in SBI and, according to the provisions of the SBI Act, it cannot fall below 55 per cent.

Mr. Bhat did not expect a rise in interest rates because of high growth in the economy. He felt that there had been a slowdown of three to four per cent in credit offtake due to rebalancing of portfolio, which was not alarming.

Besides, he said, the bank was looking at launching gold related schemes and was examining various options for it.

SBI also entered into a memorandum of understanding with the RBI and the London School of Economics (LSE) to establish an I. G. Patel Chair and an LSE India Observatory. The new Chair is named after the former Governor of the RBI, I.G. Patel, who was also the ninth director of the LSE.

The MoU was signed by LSE Director Howard Davies, RBI Governor Y. V. Reddy and Mr. Bhat.

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