SBI planning Rs 3,000-5,000 crore bond issue

SBI planning Rs 3,000-5,000 crore bond issue

O P Bhatt

"We are looking at issuing retail bonds. This is mainly to test the market. The bonds will have a maturity of 10 years,” SBI chairman OP Bhatt told reporters on the sidelines of a conference here. Chief financial officer SS Ranjan said the bank is likely to raise anywhere between Rs 3,000 and Rs 5,000 from the proposed bonds.

SBI had earlier said it needed about Rs 36,000 crore over the next five years to maintain its capital adequacy ratio at 12 percent and to support business expansion plans.

Meanwhile, Bhatt said though there is surplus liquidity in the system, this would not be the right time for the Reserve Bank to raise its cash reserve ratio (CRR), as credit growth is likely to pick up in the approaching months.

Credit growth

“This may not be the right time to hike CRR. Credit growth is picking up, and excess liquidity is expected to get disbursed in the next few quarters,” Bhatt said. CRR, which is five per cent at present, is the percentage of amount banks need to park with the apex bank as a mandatory requirement.

Quarterly review

RBI is scheduled to announce the quarterly review of its annual monetary policy on January 29 and it is widely expected that the RBI will hike CRR at the policy review to suck out excess money from the system.

Bhatt further added that regardless of RBI monetary policy actions, interest rates are unlikely to rise in the next six months, as hiking rates without sufficient demand may hamper banks’ business.

Though there is a revival seen in the economic activities, it is too early to say whether this growth will sustain in the medium term, Bhatt said.

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