SBI associates plan to raise Rs 3,000 crore

The four unlisted associates of the State Bank of India propose to raise Rs 2000-3000 crore from the market in the calendar year with the Lok Sabha clearing the SBI Subsidiary Bank (Amendment) Bill.

State Bank of Indore, State Bank of Patiala, State Bank of Hyderabad and State Bank of Saurastra are governed by three different acts.

The management of State Bank of India is also mulling over options to reorganise the operations of its associates and of the group as a whole. These include consolidation among associate banks, diluting of stake in unlisted associates and a further dilution of its holding in the already listed arms.

Official sources added that the dilution would help the State Bank of India unlock its holdings in the associates and enhance its own capital as well.

Of the seven subsidiaries, three banks, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed. SBI's stake in these three banks and State Bank of Indore varies between 75 per cent and 98 per cent. It has 100 per cent shareholding in State Bank of Hyderabad, State Bank of Patiala and State Bank of Saurashtra.

In addition to the initial public offer of the unlisted associate banks, the listed subsidiaries may also launch follow-on issues to dilute SBI's stake further. This will help the State Bank of India monetise its holdings to a greater extent, a senior SBI sources said.

The SBI Act would be amended to reduce the government's stake up to 51 per cent. However, sources cautioned that the amendment would be an enabling provision and any decision on stake sale would weigh aspects such as the need for capital and market environment.

The option of merging all the subsidiaries and creating a bank of greater size is being considered, though the finance minister has ruled it out as these banks have their own regional flavour.

"This (merger suggestion) has political, regional and state overtones and we should leave this to a discussion at a later stage," Chidambaram said in Lok Sabha in discussions on the SBI Act amendment.