• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Robust credit demand prompts search for new ways to raise funds

OUTLINING GROWTH: Mr. A.K. Purwar, Chairman, SBI, and Mr L. Brook Entwistle, Managing Director & CEO, Goldman Sachs (India) LLC, at the Asian Corporate Conference organised by Wall Street Journal and CII. - Shashi Ashiwal

Mumbai , March 20

State Bank of India (SBI), the largest bank in the country, is looking at alternative routes, such as securitisation and refinancing, to raise funds to meet the growing credit growth, said Mr A. K. Purwar, Chairman of State Bank of India, today. The bank is looking to securitise 25-30 per cent of its total assets in the next two years, he said.

Speaking to reporters on the sidelines of the Asian Corporate Conference, Mr Purwar said, SBI would start its securitisation programme from June and that it was looking to securitise a big amount.

"Globally, securitisation contributes about 28-30 per cent of banks' total assets. We will have to start with tottering steps," he said. However, he refused to comment on how much the amount would be.

The incremental credit growth in the banking industry in the last two years has been around 130 per cent.

The credit-deposit ratio for many banks is now around 70 per cent and for SBI, it is 63-64 per cent. SBI is currently looking at 28-30 per cent growth in credit, which is its highest ever, Mr Purwar said.

"SBI never had a problem of capital adequacy ratio. But with two years of robust credit growth, we need capital," Mr Purwar said.

SBI has also raised Rs 6,000 crore through refinancing in 2005-06. "There is lot of activity happening in the refinance agencies such as Nabard, SIDBI and NHB. They are playing an important role," Mr Purwar he said.

The bank plans to raise Tier-II capital through a subordinated debt issue of Rs 3,000-4,000 crore.

When asked about liquidity, Mr Purwar said, "There is a temporary silver lining and some sort of easing of liquidity as it is the end of season. But credit demand is still robust."

Earlier answering a question on government holding in banks, Mr Purwar had said SBI planned to reduce its stake in its seven subsidiaries to 51 per cent, after receiving government approval.

More Stories on : Securitisation | Public Sector Banks | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Next steps soon: Chidambaram

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line