No timeframe for associates' merger: SBI

State Bank of India (SBI) has not set any timeframe for the merger of its associates with itself. While the progress of the process will depend on a host of factors, it intends to proceed in cases where there will be less issues pertaining to the Securities and Exchange Board of India (Sebi) and stock exchanges.

"We will move in cases where we can have a smooth and successful merger," said SBI Chairman Om Prakash.

Citing the case of State Bank of Saurashtra (SBS), he said all the stakeholders had given good support for it. The boards of State Bank of India and State Bank of Saurastra had unanimously approved the merger resolution.

Stating that several issues such as the parity of the staff and other administrative issues would have to be resolved, the SBI chairman said a lot of technical processes were also involved. Unless these processes were completed, it would be premature to talk about the mergers, he observed.

"The talk about the merger of the associate banks with SBI has been going for the last 20 years. However, we will go smoothly," he pointed out.

However, he expressed the hope that the successful merger of the SBS with SBI would increase demand for more mergers.

Bhatt said the rights issue was one of the options of the bank and not the final one. "At the moment, there is nothing called rights issue."

The bank needs capital to meet its requirement for asset growth, compliance with the Basel-II norms and conforming to the accounting standard AS-15.

While the asset growth of the company was about 28-29 per cent last financial year, the bank aimed at 25 per cent growth during the current year.

"However, the growth has been very slow so far, which we will have to make up during the remaining months of 2007-08," he added.

Similarly, the bank will have to be Basel-II-compliant during the current financial year. To achieve this and manage the operational risk, it needs Rs 5,000 crore.

Besides, for conforming to the Accounting Standard-15, whereby the bank will be required to make provisions for staff benefits, the bank needs capital worth Rs 5,000 crore.

For foraying into the general insurance business and possible merger with its associates, the bank will require more capital.

He said the Union government had a 59.73 per cent stake in the SBI. So some decision would come from the government. "We are in discussion with the government to raise our requirement of capital. We expect to hear from the government in the next 2-3 months," Bhatt said.

On the overseas expansion front, he ruled out any plan for acquiring any foreign bank at the moment. Rather it would focus more on consolidation and strengthening its presence. SBI has 84 offices abroad.

"We want to strengthen the foreign branches through expanding facilities such as forex room, syndication desk and appointing persons with India knowledge," Bhatt said, adding that SBI was trying to re-orient its business plan and marketing strategy to strengthen its presence abroad.

In this context, the payment gateway facility will be expanded to more countries. Currently, customers from West Asia, the United Kingdom and the United States are availing of this facility.