SBI: Rs 18,000 crore will be raised to meet capital requirement
By Vaibhav Aggarwal
Dec 18, 2008
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In order to meet its capital requirement and enhance growth, India's largest bank, State Bank of India (SBI) is likely to raise Rs 18,000 crore from bonds by March 2010.

In a regulatory statement, SBI said: "The bank is planning to raise unsecured and rated Rupee Innovative Perpetual Debt Instruments, upper Tier or Lower Tier II subordinated debt by way of bonds or other capital instruments that RBI may permit from time to time, not exceeding Rs.18,000 crore (Rs.180 billion) during the remaining part of FY 2008-09 and FY 2009-10."

"The fund not exceeding Rs.18,000 crore would be raised in tranches with a minimum maturity of over 60 months as per the RBI guidelines through structured deals or by private placement or retail participation," added SBI in the statement.

The money that the bank intends to raise through bonds can take the Capital Adequacy Ratio (CAR) under Basel II to be above 14%, said SBI Chairman O P Bhatt.

On the second quarter ending on September 30th, SBI maintained a CAR of 12.14% and 11.51% as per the Basel I and Basel II norms respectively.

The bank recorded a growth of 40% for the period and this is attributed to the income earned through high interest rate. The net profit of the bank for the quarter increased to Rs 2,259.72 crore from Rs 1,611.42 crore recorded for the corresponding period, a year ago and the total income rose by 31% to Rs 17,909.64 crore from Rs 13,658.22 crore a year ago.


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