Even as its long-standing demand for a rights issue is pending, the country’s largest lender State Bank of India today said it can manage without a capital infusion from the government this fiscal.
“We cannot sustain without capital infusion from the government in the long-term. So it’s a crisis situation if we don’t get capital, but we have ‘Plan B’ to sustain this year, we will be able to manage in FY’12,” the SBI Chief Financial Officer, Mr Diwakar Gupta, told reporters here on the sidelines of a FICCI-IBA event.
The state-owned lender has been contemplating a Rs 20,000-crore rights issue for nearly a year now, but is yet to get a go-ahead from the Government, which owns a 59.40 per cent stake in the bank.
In the event of capital infusion not happening this fiscal, Mr Gupta said SBI’s ‘Plan B’ entails tapping other instruments like retail bonds to augment its capital base.
“Plan B is tapping other instruments for raising quasi capital like Tier-I or Tier-II. We may look at retail bond issue if demand picks up, but we don’t have liquidity issues now,” he said.
Mr Gupta, however, said that the bank will “definitely” need capital next fiscal. “We cannot sustain without capital infusion from the Government in the long-term,” he said.
The bank’s credit growth guidance for the current fiscal is 16-18 per cent, the CFO said, adding that there is no point in being aggressive on this front and compromising on asset quality.
He said small and medium enterprises are the most affected by the current scenario, as they are pinched by both demand for goods going down and interest rates going up.