The Hindu Business Line : SBH to raise Rs 900 cr

Hyderabad, March 13 State Bank of Hyderabad (SBH) will raise Rs 900 crore capital through upper tier II and tier I route in about a week to meet the Basel II compliance requirements by the end of this month and for operational flexibility.

“The formalities are under way and we hope to complete the process by March 24,” Mr Amitabha Guha, Managing Director, SBH, told Business Line here on Thursday.

Tier-I, II mode

About Rs 500 crore would be mobilised in Upper Tier II mode, while remaining Rs 400 crore would be sourced through Upper Tier I, Mr Guha said.

The fund raising was necessary due to a one-time provisioning under Accounting Standards 15 (AS15) which required the bank to set aside Rs 450 crore for meeting superannuation benefits.

“There are two options for this. One can either go for amortisation in a phased manner over a period of five years or can do it in one go. We preferred to do it the latter way,” he said.

As the Basel II regime prescribes capital adequacy of over 10 per cent, the bank is in need of capital induction. “Though we have raised Rs 160 crore tier II capital last month, we need more funds to meet CRAR norms of Basel II,” Mr Guha explained.

Post-mobilisation of the proposed capital, the capital adequacy of the bank would be at 10.53 per cent, he added.

Depending on the business needs, the bank would examine the option of raising more capital in due course.

On the rationale behind raising capital when the merger of SBH with SBI was on the cards, Mr Guha said: “The merger is under consideration. But we need to take necessary decisions as a standalone, profitable bank.”

In the current financial year, the bank has done good business. “We will be closing this year with 27 per cent and 19 per cent growth in advances and deposits respectively while the total business will be over Rs 88,000 crore with a customer base of 10 million,” he said.

The bank’s business is likely to cross the one-lakh-crore mark by July, he added.

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