Financial Daily from THE HINDU group of publications
Sunday, Mar 26, 2006
Financial Daily from THE HINDU group of publications Sunday, Mar 26, 2006 |
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Public Sector Banks Markets - Public Offer Government - Financial Policy Money & Banking - Stocks SBI lines up three unlisted associates Our Bureau
Teller system The combined net NPAs of the associates are less than one per cent. Public issue will be the only route for unlocking value
MUTUAL PARTNERSHIP: Mr U. K. Sinha, Chairman & Managing Director, UTI AMC, and Mr A. K. Purwar, Chairman, State Bank of India, at a press conference in Mumbai on Saturday — Paul Noronha
Mumbai , March 25 State Bank of India (SBI) plans to reduce its stake in State Bank of Patiala, State Bank of Hyderabad and State Bank of Saurashtra as soon as Parliament approves the amendment to the SBI (Subsidiaries) Act. This move follows the recent Union Cabinet approval to place the Act before Parliament for amendment. These three associates are not listed. "We will offer the associates' shares for sale. Public issue will be the only route for unlocking value," Mr A.K. Purwar, Chairman and Managing Director, SBI, said. This will help SBI unlock the value it holds in its associates and also help these entities raise capital for further growth, said Mr Purwar. "SBI has a huge amount of value waiting to be unlocked. The associates are starved of capital. Raising capital will also help them grow," he said. Speaking to presspersons on the sidelines of a seminar to announce a tie-up with UTI Mutual Fund, Mr Purwar said the associates are "jewels in the SBI group". The combined net NPAs of the associates is less than 1 per cent. In the last 14 years, they have grown and many of them do not have headroom to raise capital. To support asset growth, they have to raise capital.
Tight liquidity
About liquidity in the system, Mr Purwar said the situation is still tight. There is definitely an upward bias in interest rates, across all sectors. When asked if SBI would raise its prime lending rate, Mr Purwar said, "We are working in a dynamic situation and are closely watching the PLR." An Indian Banks' Association's sub-committee, which includes chiefs of five banks, is scheduled to meet the RBI Governor next week to discuss steps to improve the liquidity position. The focus of the meeting would be on growth and stability, Mr Purwar said. The bank has completed formalities for buying 51 per cent stake in a bank in Mauritius and is in the final stages of acquisitions in Kenya and Indonesia. "We are hoping for opportunities domestically but our focus is overseas," he said.
To vend UTI products
SBI on Saturday signed an agreement to distribute the products of UTI Mutual Fund through its branches. This is the first time that the bank is tying up to distribute financial products outside the SBI group, Mr Purwar said. About 30 per cent of SBI's mutual funds and insurance products are sold through its branch network.
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