State Bank of India (SBI) would come out with a retail bond issue of about Rs 200 crore in the first half of the year, Chairman O P Bhatt said today.
This will be the first bond issue by a bank for retail clients. The size of the issue could be around Rs 200 crore to begin with. The money will help the bank shore up Tier-II capital.
The bonds would have a duration of 15 years, with a call option for 10 years, or a duration of 10 years, with a call option of five years, said a top SBI official.
“The initial size could be a few hundred crores. We want to create a secondary market for them,” said Bhatt.
Bhatt said SBI was in also talks with the government to raise 15,000-20,000 crore through a rights issue. The issue was expected to happen this financial year, he said.
The bank also wanted its life insurance venture, SBI Life to be listed, he said. “We do not capital for the company, but we would like it to be listed so that there can be some price discovery. We are in touch with Irda (Insurance Regulatory and Development Authority) for that,” he said.
On interest rates, Bhatt said, “If RBI (Reserve Bank of India) takes steps to control inflation, liquidity could dry up, and there could be an upward bias in interest rates.” However, as on March 2010, the bank had a liquidity overhang of about Rs 40,000 crore and credit offtake was not picking up, said Bhatt.
The bank is expecting credit growth of 21-22 per cent in the present financial year.
Bhatt said the bank would not be aggressive in deposit mobilisation till June. After that, he expected deposits to grow 15-16 per cent in the present financial year.
