SBI Caps stops project advisory, structured finance for private sector

SBI Capital Markets, the merchant banking subsidiary of State Bank of India, will stop providing project advisory and structured finance (PASF) services to private sector entities from August. The country’s largest lender took this decision after the Reserve Bank of India (RBI) flagged off regulatory concerns and conflict of interest.

SBI Caps will continue to take PASF mandates from public sector undertakings (PSUs) as SBI sees synergy with state-owned entities.
 

The decision to stop PASF services for private sector will affect 50 capital market professionals. SBI is likely to offer them a position in the bank's project finance unit.

SBI in a filing with Bombay Stock Exchange said SBI Caps would discontinue activity of taking mandates from private sector for debt syndication (both greenfield and brownfield projects/refinancing) and debt resolution in view of duplication of processes resulting in delays, as also certain regulatory concerns.

As in the past, SBI will continue to provide support and assistance to all its customers on an ongoing basis. The boards of both SBI and SBI Caps have given approval for it and executed the memorandum of undertaking dated July 31, 2018, SBI said.

Senior group executives said PASF had a major share in SBI Caps’ revenues and the decision to stop this business for private sector would dent cash flows.

The bank is also working on merging some of the subsidiaries of SBI Caps within the investment banking arm. This will help SBI Caps become a pure-play investment bank.