SBI needs $15 bn for expansion

State Bank of India needs capital in excess of Rs 60,000 crore ($15 billion) in the next three years to develop its business and expand globally.

The country's largest lender will transfer its stakes in SBI Life and SBI Mutual Fund into a holding company. The holding company will be listed on the stock exchanges to capture value of investments.

"The bank may require roughly Rs 50,000 crore in the next three years. This is in addition to ploughing back profits to meet business requirements," SBI chairman O P Bhatt said addressing annual general meeting.

Another SBI official said the bank expects to plough back profits worth Rs 10,000 crore in the next three years. The credit growth is estimated at 28 per cent (y-o-y), in an optimistic scenario.

Bhatt said the bank was likely to hit the capital market with a follow-on public issue this year. It was in talks with merchant bankers and government on modes of raising capital (equity and bonds), he added.

The bank will need to raise Rs 10,000 crore to maintain the tier-I capital above 8 per cent. Its tier-I capital base is 8.01 per cent. The capital adequacy stood at 12.34 per cent at the end of March 2007.

On the interest rate trends, the SBI chairman said the call rates had remained below 3 per cent for the last three weeks, and the lending rates were expected to soften in the short-run.

The bulk deposit rates had also come down, he added, but did not comment on any cut in the term deposits rates (card rates).