SBI mulls raising Rs 2000-3000 cr tier-II capital after Q2 results

The State Bank of India (SBI) is contemplating raising tier-II capital between Rs 2,000 crore and Rs 3,000 crore after the Q2 results.

Besides, it may also consider coming out with deposit, insurance or mutual fund products focussing on India Millennium Deposits (IMDs) to raise funds for its overseas operations.

Speaking on the sidelines of a conference on microfinance organised by ISB, SBI chairman A K Purwar said, "Our first quarter results have been encouraging. Based on our performance in the second quarter, we may raise tier-II capital between Rs 2,000 crore and Rs 3,000 crore."

Tier-I capital includes paid-up capital, statutory reserves and other disclosed reserves. Tier-II capital consists of subordinate debt, cumulative preference shares, revaluation of reserves besides some other capital instruments. Subordinate debt in tier-II capital cannot be more than 50 per cent of a bank's tier-I capital.

On whether SBI would think of rolling over IMDs, Purwar said that they need funds for their overseas operations and may consider coming out with deposit, insurance or mutual fund products focussing on IMD redemptions.

IMDs are basically foreign currency denominated deposits and are due for redemption at the end of 2005.

Commenting on whether there would be a change in the interest rates in the near future, Purwar said that the rates would remain stable in the short term.

"But the rising interest rates in the global markets would have an impact on the rates in India too," he added.

"We are putting in place 800 agricultural experts by this month-end for microfinance purposes," he said, adding that half of the self-help groups which the bank has financed are in Andhra Pradesh.