SBH defers public offer

The State Bank of Hyderabad, which planned a public offer during the second quarter of the current fiscal, has put on hold its proposed IPO and has decided to take a final call in December.

"We will review the proposal in December. Currently, it is put on hold," Amitabha Guha , the managing director , State Bank of Hyderabad told Business Standard.

This follows the instruction from the State Bank of India to all its associate bank not to indulge in such exercise pending their merger with SBI.

"With every passing day the possibility of merger is getting brighter", Guha said. However, he refused to specify any timeframe for it.

Guha, who was here to launch a Post Graduate Programme in Banking, Insurance and Financial Services Management Programme of the Asian School of Business Management, said hardening interest rate has impacted the growth of credit in the banking sector including the State Bank of Hyderabad.

However, there is no possibility of the rates going up further in the near future, he pointed out The bank is eyeing a business of Rs.1 lakh crore by March 2008 from Rs.72,000 in March 2007.While the deposits are expected to grow by 42 per cent from Rs.42,000 crore to Rs.60,000 crore, advances are likely to increase by about 33 per cent to Rs.40,000 crore from Rs30,000 crore by March 2007.

The bank will continue to focus on the lending to the Small and Medium Enterprises (SME) sector this fiscal. It aims to lend Rs 650 crore more to this sector during the current fiscal which is higher by 25 per cent over 2006-07. It has already lent Rs 197crore during the first quarter of the 2007-08.

Besides, it has firmed up plans to lend Rs 1,400 crore to agriculture sector including Rs.120 crore for tractor loan. Similarly, it aims to lend Rs 250 crore as educational loan and Rs 1,000 crore home loan during the year.

Stating that there is going to be further consolidation in the banking industry, Guha said the licensing system for the foreign banks to enter Indian market will be done away with by 2009.This will open the banking sector to foreign competition.

"You can't expect a bank having Rs 20,000 crore business to compete with the foreign banks', he pointed out.

Meanwhile, the bank approved a loan proposal of the Emami group's jatropha cultivation project in Orissa. MOU with the company has already been signed and the loan will be provided after completion of formalities, he said. Similarly, it has sanctioned Rs 30 crore to Bhusan Steel and Power and Rs 50 crore to Bhairabi Power.

Besides, talks are in advanced stage for providing loan to the Hyderabad based CVR Navyuga group which is planning to set up a greenfield port based power plant at Astarang in Puri. This project involves an investment of Rs 6,000 crore. The company proposes to construct a 2 x 660 Mw coal fired thermal power plant in the vicinity of the port.