 "SBI to merge 1 subsidiary every two years")
The State Bank of India (SBI) has said that every two years it will merge one subsidiary each, over the next 10 years. The Bank has also said that due to recent political developments in the State of Andhra Pradesh, the proposed merger of State Bank of Hyderabad could be delayed.
Meanwhile, the country's largest lender said it is bullish on its growth prospectus, even it will surpass its earlier target, which it thinks may bring some cheer in the market and expects its capital to increase by Rs 16,000 crore with the infusion of profit and government infusion.
SBI's Chairman Pratip Chaudhuri, who came to Suranam village, Sivaganga district (the constituency of Union Finance Minister P Chidambaram) to participate in SBI's 15,000th branch inauguration on Saturday said “out of five subsidiaries, possibly we will not be considering State Bank of Hyderabad now, due to peculiar political situation” in Andhra Pradesh. It may be noted,
“After that, we will do an evaluation as to which is the most right candidate to merger first”. SBI has five associate banks including State Bank of Hyderabad (SBH), State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Patiala.
Chaudhrui said, first practical implications should be looked at before any merger. For instance SBH got 1,200 branches in Andhra Pradesh, while SBI got 1,300 branches. “You can't put 2,500 branches under one local head office and it will become unmanagable. So we need 2-3 local head office,” said Chaudhrui
“We have to think of circles post merger and that is why we cannot take decision in such an hurry”.
He added, “it will take two years to digest a merger, because of branch rationalisation and all. Every two years we should merge one subsidiary. In the next 10 years, all five subsidiaries will be part of SBI that is the picture we have in mind,” said Chaudhuri.
On Growth
On SBI's outlook, Chaudhuri said, till now (current fiscal) SBI's loan book grew by around 21%. Earlier the Bank gave a guidance of 20%, which the Bank will surpass, he said, without giving any specific percentage stating that normally second or third quarter will be the time the loan will growth.
He noted, saving ratio in India is around 30% and large portion comes to commercial banks. The Banks are sitting on around Rs 60,000-70,000 crore of excess liquidity people are not borrowing enough from the system.
Education, agriculture, retail loans cannot observe more than 30-40% of the total. So main requirement has to come from capital intensive sectors like power, steel and metal. “If their loan demand revives it will be good. Right now no shortage of resource infact we are having a challenge to give more,” said Chauhuri.
He also said the Bank gave a guidance of 3.5-3.6% which still it is still holding on to.
Capital infusion
The Bank is expecting a total capital infusion of Rs 20,000 crore this year, of which around Rs 16,000 crore will be profit plough back and an additional Rs 4000 crore from government. As Rs 4000 crore is expected to be the dividend outflow, leaves the bank with a Rs 16,000 crore additional captial.
Government's money will be just supplementary, while the main source will be profit and if the market opens up we will look at more opportunities to create buffer.
Currently we are capital, buffer for future. Tierl I 9.65%, incase growing economy and growth bound to return back. SBI will maintain its leadership position, we want to be stocked.
NPA level
NPA have increased due to stress in the economy and we cant shut our eyes towards to that so therefore NPAs have increased in the system the way the NPA computed was harshess (8.50). If a company misses its internal target of commercial production, then it called as NPA.
Take Kudankulam if it starts after six months of its original schedule then it becomes NPA, nowhere in the World this kind of system is exist.
“I am glad that the Reserve Bank of India has accepted the logic and now said one year this will not be treated as NPA”. The sectors deal with Government, power etc., showing more stress sectors related to down stream are also facing problem, he added.
Total gross NPA of the Bank is around 5%, said Chaudri, who noted NPA means not that the money is lost, the account is running behind thats all. “We should not blow it beyond proportion. Every year from our bad loans we recover 1,300 crore, said Chaudri.
To some extent profit may returns, but returns are good in India.
Meanwhile, the country's largest lender said it is bullish on its growth prospectus, even it will surpass its earlier target, which it thinks may bring some cheer in the market and expects its capital to increase by Rs 16,000 crore with the infusion of profit and government infusion.
SBI's Chairman Pratip Chaudhuri, who came to Suranam village, Sivaganga district (the constituency of Union Finance Minister P Chidambaram) to participate in SBI's 15,000th branch inauguration on Saturday said “out of five subsidiaries, possibly we will not be considering State Bank of Hyderabad now, due to peculiar political situation” in Andhra Pradesh. It may be noted,
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He added, one MD of the SBI, who is in- charge of SBH merger was to submit a report on July 31, but got delayed and within the next week it will be made available.
“After that, we will do an evaluation as to which is the most right candidate to merger first”. SBI has five associate banks including State Bank of Hyderabad (SBH), State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Patiala.
Chaudhrui said, first practical implications should be looked at before any merger. For instance SBH got 1,200 branches in Andhra Pradesh, while SBI got 1,300 branches. “You can't put 2,500 branches under one local head office and it will become unmanagable. So we need 2-3 local head office,” said Chaudhrui
“We have to think of circles post merger and that is why we cannot take decision in such an hurry”.
He added, “it will take two years to digest a merger, because of branch rationalisation and all. Every two years we should merge one subsidiary. In the next 10 years, all five subsidiaries will be part of SBI that is the picture we have in mind,” said Chaudhuri.
On Growth
On SBI's outlook, Chaudhuri said, till now (current fiscal) SBI's loan book grew by around 21%. Earlier the Bank gave a guidance of 20%, which the Bank will surpass, he said, without giving any specific percentage stating that normally second or third quarter will be the time the loan will growth.
He noted, saving ratio in India is around 30% and large portion comes to commercial banks. The Banks are sitting on around Rs 60,000-70,000 crore of excess liquidity people are not borrowing enough from the system.
Education, agriculture, retail loans cannot observe more than 30-40% of the total. So main requirement has to come from capital intensive sectors like power, steel and metal. “If their loan demand revives it will be good. Right now no shortage of resource infact we are having a challenge to give more,” said Chauhuri.
He also said the Bank gave a guidance of 3.5-3.6% which still it is still holding on to.
Capital infusion
The Bank is expecting a total capital infusion of Rs 20,000 crore this year, of which around Rs 16,000 crore will be profit plough back and an additional Rs 4000 crore from government. As Rs 4000 crore is expected to be the dividend outflow, leaves the bank with a Rs 16,000 crore additional captial.
Government's money will be just supplementary, while the main source will be profit and if the market opens up we will look at more opportunities to create buffer.
Currently we are capital, buffer for future. Tierl I 9.65%, incase growing economy and growth bound to return back. SBI will maintain its leadership position, we want to be stocked.
NPA level
NPA have increased due to stress in the economy and we cant shut our eyes towards to that so therefore NPAs have increased in the system the way the NPA computed was harshess (8.50). If a company misses its internal target of commercial production, then it called as NPA.
Take Kudankulam if it starts after six months of its original schedule then it becomes NPA, nowhere in the World this kind of system is exist.
“I am glad that the Reserve Bank of India has accepted the logic and now said one year this will not be treated as NPA”. The sectors deal with Government, power etc., showing more stress sectors related to down stream are also facing problem, he added.
Total gross NPA of the Bank is around 5%, said Chaudri, who noted NPA means not that the money is lost, the account is running behind thats all. “We should not blow it beyond proportion. Every year from our bad loans we recover 1,300 crore, said Chaudri.
To some extent profit may returns, but returns are good in India.