SBI meet on post-'09 strategy

State Bank of India's (SBI) top brass and its middle management will camp at a resort in the suburbs here to chalk out a strategy for coping with rising competition from foreign banks after 2009, when the sector is opened fully to global majors.

Chairman O P Bhatt today met the senior management team in preparation for the five-day closed-door meet that begins Wednesday.

Bhatt also reviewed the performance of the bank today and assessed the progress in respect of business targets set for 2007-08 (Apr-Mar), industry officials said.

Senior SBI officials were not available for comment. Most of them remained closeted in meetings after Bhatt concluded the meeting. SBI is targeting loan growth of about 25 per cent and deposit growth of about 22 per cent in 2007-08.

The country's largest bank wants to chalk out a strategy to retain its position after 2009.

The Reserve Bank of India is likely to open up the banking sector completely post 2009, leading to strong competition from foreign banks who are looking at setting up shop here.

Apart from offering better customer service, foreign banks will try to eat into the market share of Indian banks by offering better pricing of products.

The meet of SBI's top brass with the mid-level management will be interactive, where among other issues, Bhatt will review the bank's sector-wise performance in the first four months of 2007-08.

Based on the feedback and review of the targets, the bank will decide on future strategies to ramp up operation in core sectors like corporate, retail and small and medium enterprises.

Earlier, Bhatt had said SBI targets loan growth of 25% and 22% deposit growth in 2007-08.

One of the biggest hurdle for SBI to expand its business is lack of adequate capital. Of late, a lot of news has been trickling in on SBI's capital raising plans.

Last week, the government said the bank plans to raise Rs 896 billion capital in five years.

In June, Bhatt had said the bank needs to raise Rs 140 billion in the current financial year, which includes an equity issue. There was also news that the government would infuse fresh capital in SBI.

SBI merged its unlisted subsidiary""State Bank of Saurashtra-with itself and is planning to merge other associate banks as well. Bhatt had also said SBI aims to regain its lost market share by 25 basis points every quarter, that is 1 per cent in a year.

SBI's market share now is 15 per cent.

All these developments have helped the bank's stock to rise by 9.6 per cent, while the Bank Nifty gained 4.3% since June.

SBI shares ended at Rs 1,611.95 on the National Stock Exchange today, up 0.33 per cent from Monday.