SBI prefers rights issue to raise capital: Bhatt

The country's largest lender, State Bank of India (SBI), would prefer a rights issue to raise funds for business growth rather than diluting government holding, bank's Chairman O P Bhatt said today.

"I want the government to continue to be the major stake holder in SBI... If there is an opportunity to raise capital quickly and efficiently, we would like to do that (rights issue) ... It gives us a lot of flexibility in future," Bhatt told reporters here.

The government recently tabled the SBI Act Amendment Bill in the Lok Sabha with an aim to reduce state-holding in the bank to 51 per cent from around 59 per cent now.

However, Bhatt indicated that the bank is unlikely to go for the rights issue immediately as it has enough capital and good liquidity position at the moment.

SBI has a surplus liquidity of close to Rs 50,000 crore, against Rs 75,000 crore in December.

"I keep saying that we have a five-year perspective. We do not need capital immediately because our capital adequacy ratio is now around 14 per cent," Bhatt said.

On the merger of State Bank of Indore with the parent, Bhatt said that the proposal needed to be cleared by the Government and Boards of both banks. The entire process may take over a month to get completed.