SBI to raise Rs 4,000cr tier-II capital

State Bank of India (SBI) is planning to raise tier-II capital (subordinated debt) worth Rs 3,000-4,000 crore to support credit growth.

"Credit growth is going to be substantial in the next fiscal (2005-06) in all sectors. Therefore, the bank is exploring options to raise capital of Rs 3,000-4,000 crore through tier-II bonds," SBI chairman A K Purwar said today.

Purwar did not specify any time frame in which the bonds with a five-year maturity would hit the market.

Asked about tapping the equity market, Purwar said: "I will not rule out the possibility of going for a public offering as the current market is very attractive. The bank is likely to comply with US GAAP norms by the end of this fiscal."

Replying to a query on rising interest rates, Purwar said: "Inflation and world oil prices are the key challenges to managing interst rates. If inflation is kept within reasonable limits, interest rates are expected to settle down." High government borrowing would also impact the rates, he added.