Date:10/10/2007 URL: http://www.thehindubusinessline.com/2007/10/10/stories/2007101050790600.htm

In-principle nod for SBI to raise Rs 10,000 cr

Our Bureau

New Delhi, Oct 9 The Government has given an in-principle nod for State Bank of India (SBI) to raise about Rs 10,000 crore of capital, Mr Vinod Rai, Secretary, Financial Services, has said.

He however said that the mode through which capital would be raised was yet to be finalised. The capital raising exercise would happen before the end of March 2008, Mr Rai told reporters on the sidelines of Microfinance India conference here today.

Last week, the SBI Chairman, Mr O.P.Bhatt, had said that the bank was looking to raise capital in the period of November - January next year and that it was awaiting the approval of the Finance Ministry for this purpose. He had also expressed confidence over achieving 24 per cent growth in advances this year even as the trend so far was well below this level.

Currently, the Centre has 59.73 per cent stake in SBI, which is the country’s largest commercial bank. Meanwhile, Mr Rai admitted that there has been decline in credit growth, but highlighted that it has not been more than what had been anticipated by the Ministry.

“It is in the realm of what we had anticipated”, he added.

On the statement of intent filed by banks with the Finance Ministry, Mr Rai said that the Ministry would take a realistic view if banks believe that the targets are unachievable. Punjab National Bank had recently indicated that the credit growth targets suggested by the Finance Ministry for the current fiscal may not be achievable and needed to be scaled down.