SBI foresees 19% growth in credit during this fiscal

The State Bank of India (SBI) expects to post a credit growth of 19 per cent for the current fiscal ending March 2005. Due to the healthy credit growth, the bank will look at raising tier II capital in the next fiscal in order to meet the stringent Basel II provisioning requirements.

"We will look at raising tier II capital in the next fiscal. If it were not for this healthy credit growth we did not need to raise resources," said A K Purwar, chairman, SBI.

Several public sector banks like Punjab National Bank, Allahabad Bank, Bank of Baroda, Bank of India among others are gearing up to raise resources from the capital markets ahead of the Basel II requirements.

The year-on-year growth in credit till date for SBI has been over 25 per cent. This fast pace is not sustainable and will moderate in the future to about 19 per cent by end of this fiscal, said Purwar.

He was speaking to newspersons at the sidelines of a press conference held by SBI Life for the launch of its first unit linked insurance plan here today.

On SBI's plans to grow through the inorganic route (acquisitions), Purwar said, "We are actively looking at acquiring a bank in Asia and Africa. We hope to make an announcement before the end of the fiscal.

The acquisition of a bank in India was a statement of intent that SBI was open to acquire a regional bank, he said. On consolidation, he said, it would pose a challenge to SBI.

"Now we are the only one offering all the variety of financial products. In some time there will be other players who will compete with us on that front. Meanwhile SBI will not be stationary," he said. Referring to interest rates, he said rates would remain stable in the short term.