SBI plans to raise Rs 15,000 crore

Bank to enter private equity, venture capital.

The State Bank of India (SBI), India's biggest lender, plans to raise Rs 15,000 crore within the current financial year to bolster capital and meet the growing credit demand.

The funds will be raised through a mix of debt and equity, O P Bhatt, chairman and managing director, SBI, said at a press conference here today.

SBI is in discussions with six to seven investment bankers to decide the right mix and timing for raising the funds. The bank plans to raise as much as Rs 6,000 crore through share sale.

"We may sell shares between July and December," Bhatt said. The public offer will be the first by SBI since it raised $350 million in October 1996 from overseas investors and the first to domestic investors since 1994.

SBI is waiting for Parliament to change laws that will allow it to sell shares, Bhatt said.

The government is also in the process of acquiring the RBI's 59.73 per cent stake in SBI to avoid a conflict of interest. The laws may be changed to allow state ownership to be cut to 51 per cent from a minimum 55 per cent stake at present.

SBI has also created a new business group to evaluate emerging business opportunities. It has decided to enter into the areas of private equity, infrastructure fund and venture capital.

SBI would form a private equity corpus of Rs 4,200 crore to be invested in sectors such as infrastructure, Bhatt said.

The bank has also initiated talks with some experienced venture capital funds for entering the private equity segment.

SBI is also planning to foray into general insurance and has shortlisted two or three foreign players in the segment. The foreign partner would be able to hold up to 26 per cent equity in the venture as per prudential norms, Bhatt said.

The bank is also planning to get into pension funds management. He said the bank would enter the sector through either SBI Life or SBI Mutual Fund.

SBI's life insurance partner is Cardiff SA and mutual fund partner is Societe General.

The bank is also looking at entering the financial planning and wealth management segments.