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Corporate Dec 5, 2012

Govt likely to infuse Rs 4,000 cr in SBI this fiscal

State Bank of India today said it is expecting around Rs 4,000 crore infusion from government this fiscal that will ramp up its capital base to over 13 percent.

"I think the government will give us capital and it should be around Rs 4,000 crore. What mode it will be, is a matter that is being discussed," Managing Director and Chief Financial Officer Diwakar Gupta said today.

The Rs 4,000-crore capital infusion is adequate for us as that can keep the capital base above 13 per cent, Gupta added.

Reuters

At the end of the September quarter, SBI's capital adequacy ratio, a key indicator of a bank's financial strength expressed as a ratio of capital to risk-weighted assets, stood at 12.63 per cent, from 11.4 percent in the year-ago quarter. The government earlier this week had said it would finalise the capital infusion plans for its banks this week itself. The budget has earmarked nearly Rs 15,800 crore for shoring up the core capital base of the state-run lenders hit
by bad loans and poor asset growth.

The government had infused nearly Rs 8,000 crore as capital last fiscal.

NPA's are challenging

On the rising bad loans, Gupta said NPAs are a challenge for the entire industry, but on the whole the worst is over.The July-September quarter saw the bank reporting the highest-ever net profit, clipping at over 30 per cent to Rs
3,658.14 crore, its NPAs soared as well.

Gupta also admitted that the credit pick-up is not robust, despite a pick in home and auto loans, driven by the
recently-launched festive offer. "The loan pipeline is not very robust. There is hesitation for putting large projects. Retail will pick up in next six months," Gupta said.

No cartelisation in fixing saving deposit rates, says SBI
Meanwhile, SBI also dismissed allegations of cartelisation by big banks in keeping savings deposit rate unchanged despite RBI deregulating this over a year ago.

Disputing the charges Gupta said the bank's decision not to raise interest rates on savings deposits is a purely commercial one and does not amount to cartelisation.

SBI and its five subsidiaries controL nearly control 25 percent of the banking system. They have not increased their savings account deposit rates. They offer 4 percent.

Gupta said he has been reading reports over the past few days about a possible action by the competition watchdog on banks for allegedly acting as a cartel by not increasing the rate on saving deposits, which was deregulated by the Reserve Bank in the October 2011 credit policy. The interest rate on savings accounts was the only regulated product in banking till the RBI deregulated it.

'Trying to help revive Kingfisher'

When asked about Kingfisher, Gupta said banks are "trying to do everything to find an amicable solution" to the carrier's financial troubles.

The SBI comment comes a week after the expiry of deadline that the lenders had set to the airline management to come up with a revival plan, that includes a $1 billion capital infusion. After the regulator DGCA suspended the airline's flying licence on October 19, SBI Chairman Pratip Chaudhuri had set a November 30 deadline to the airline management to infuse at least $1 billion in fresh capital as part of the revival exercise for the banks to consider lending afresh or recasting the existing loans. SBI has an exposure of Rs 1,500 crore to the airline.

PTI


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