SBI to monetise non-core assets, list few other units

Move aims at meeting capital requirements and Basel-III norms

State Bank of India (SBI), the country's largest bank, plans to monetise non-core assets and list some of its subsidiaries to meet capital requirements as well as meet Basel-III norms, which will kick in from March 2019.

While public sector banks need Rs 1.80 lakh crore to meet Basel-III norms, the government will provide only Rs 70,000 crore, SBI Chairman Arundhati Bhattacharya said, adding the rest would have to be borne by banks through profits and non-core assets.

"For instance, for us, we have a number of non-core assets which we are looking at monetising. We also have very successful subsidiaries which we have not listed. So, we can look at those as well," she said at an Assocham event.

The bank has already announced plans to lower its stake in insurance ventures - SBI Life Insurance and SBI General.

In its life insurance venture, SBI proposes to sell up to 10 per cent stake, while it may be about 23 per cent in case of its general insurance company.

Bhattacharya said individual banks are examining various ways through which they can raise capital. "One thing I would like you to be assured about is that there is a lot of thought going (into it) and the banks will be capitalised enough in order to have good capital to support the economy," she said.

She emphasised that meeting Basel-III requirements would be a challenge.

"It is a challenge because India is basically capital-starved. On top of that, you need capital to grow. And to compound all of this, you (have) regulatory requirements on keeping capital at higher level than Basel," she said.

This is a challenge all banks have to face and they are in a position to base the kind of capital that the regulator would like them to have, she added.

Stating that India does not require such stringent capital norms, she said: "Basel template as it was created was really and truly not meant for a country like India which has plain vanilla banking. West, they have the investment-led model. They have got many, many complicated products."

Basel norms basically provide risk templates for banks and the amount of capital required to keep against lending.

On interest rate, Bhattacharya said since banks play a part in providing social security, they cannot provide negative rate of return to savers. In a developing economy, inflation is slightly high so that banks have to provide slightly higher returns over inflation so that savers earn some positive return, she said. If the cost of borrowing for banks comes down, the lending rate can be lowered, she added.