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Banking behemoth State Bank of India (SBI) intends to continue with the consolidation drive within the SBI Group. It would this fiscal initiate steps to gobble up an associate bank fully owned by it.
The preference would be to consolidate associate banks where SBI holds 100 per cent, Mr Pratip Chaudhuri, SBI Chairman, told reporters here.
The target associate bank could be either State Bank of Hyderabad or State Bank of Patiala. Both are 100 per cent owned by SBI.
Currently, SBI has five associate banks — State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur and State Bank of Mysore. Last year, SBI had acquired State Bank of Indore. State Bank of Saurashtra was acquired by SBI in 2008.
Although SBI is the largest bank in India, it ranks only 68th among the world's largest banks. The Finance Ministry had in November last year told the Parliamentary Standing Committee on Finance that SBI was looking to consolidate all its subsidiary banks with itself in the next 12-18 months.
The Finance Ministry had pitched for consolidation, stating that it would be “immensely beneficial” to the SBI Group as it would bring in economies of scale, reduce administrative overheads, help re-deploy and channelise trained manpower to business development.
Rights issue
Meanwhile, Mr Chaudhuri said that the SBI will come out with a rights issue during the current fiscal. He said that the bank was in discussion with the Government on the proposed rights offering. Indications are that the Government may agree for rights issue size of about Rs 20,000 crore.
SBI is also keen to set up/participate in infrastructure debt fund. The guidelines for infrastructure debt funds are yet to be finalised and issued by the Government.
On whether SBI would hike lending rate if the RBI were to increase policy rates by 25 basis points on May 3, Mr Chaudhuri said that SBI was not contemplating base rate hike for now. He also noted that any such move by the central bank would not hit SBI immediately.
Mr Chaudhuri also said that SBI has dropped its plans to acquire a bank in Indonesia. SBI may is looking to open a subsidiary in Australia.
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