Pranab to interact with SBI board on finances

July 14th, 2011 - 6:51 pm ICT by IANS  

Pranab Mukherjee Kolkata, July 14 (IANS) Union Finance Minister Pranab Mukherjee will interact with the State Bank of India (SBI) board Aug 6 to understand what kind of financial support the bank required from the government, a top executive said Thursday.

“The finance minister told us that he would personally address the board of SBI Aug 6 to understand what kind of support the bank requires from the government,” SBI Chairman Pratip Chaudhuri told reporters here.

“Our capital adequacy tier I capital, which was 9 percent, dropped to 7.72 percent. Part of it would be refunded by our profit during the year. And we are already in talks with the government for a rights issue of about Rs.20,000 crore,” he said.

“We are going to the government with several proposals. The finance minister and the government overall have been very supportive. They recognise the importance of State Bank of India… the role it is playing in the economy. They are also interested in preserving the public sector character of the bank,” Chaudhuri said.

He said they would have to give them different options for the rights issue, where the government holding is about 59 percent, but according to SBI norms it can drop to 51 percent also.

On how urgent is for the SBI to get the money, he said: “The money can come by the end of March, 2012.”

The chairman said the bank has lowered credit growth projection from 19-21 percent to 16-19 percent.

“In the Q1 this fiscal, the bank’s net interest margins are looking quite better,” he added.

Chaudhuri said the SBI has asked the government not to deregulate the savings rate.

“Savings banks issue has to be addressed in totality. If you want to deregulate, the entry barrier for savings bank must be gone,” he added.

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