Via Media For Float Planned

The State Bank of Hyderabad (SBH) is working on a via media that will enable it to go ahead with its proposed public issue even without a parliamentary amendment to the State of India (Subsidiary Banks) Act.

SBH Managing Director K K Khandelwal said yesterday that the bank has been seeking, for almost three years now, amendments in two areas: to split the banks share face value from the existing Rs 100 per share to Rs 10 per share and remove the limit of 200 shares that an individual or an institution can hold.

While this amendment would help SBH broad-base its share holding, the bank plans to go ahead with the present set up if the amendment is likely to be delayed indefinitely.

 

Khandelwal said for opting for the via media, only the permission of the holding bank, the State Bank of India (SBI), is required. SBIs thinking is in line with ours in the matter, he told newspersons. SBH had mooted the public issue three years back when the market was favourable. But considering that the bank is one of the leading banks in the country, we still can go to the market, Khandelwal said.

He said generally the fund position of the bank remained excellent. But they would like to go to the market to prepare themselves for the competition ahead, especially with the emergence of what has come to be known as the high-tech banking institutions and double the turnover to Rs 23,000 crore by the turn of the century.

To increase turnover, the SBH chief said, the bank should have a network of not less than 900 branches (800 branches now) of whom 175 should be fully-computerised.

Khandelwal said in 1996-97 SBH had considerably consolidated its strong financials, achieving an impressive growth of 19.03 per cent in deposits at Rs 7,036.55 crore and 14.45 per cent increase in gross profits to reach Rs 229.35 crore, while net profit increased to 52.45 crore.

Net owned funds increased by 19.76 per cent to Rs 296.93 crore, while the capital adequacy ratio exceeded the norm of 8 per cent to reach 10.84 per cent.

The SBH Chief said that the non-performing assets increased by 11.42 per cent to Rs 460 crore this year from Rs 385 crore last year, but said this was indicative of the risk it has been taking.

He was confident this will come to single digit this year.