SBI public offer likely in FY08

State Bank of India (SBI) will raise fresh capital through a public offer next fiscal after the SBI amendment bill is approved by the Parliament, chairman O P Bhatt said today.

"For raising tier I capital we are awaiting approval for the bill...We would not be able to do so before next financial year," O P Bhat, chairman of SBI, said on the sidelines of a LSE Asia Forum here.

"In the meantime, the bank will raise around Rs 2,000 crore of tier-II capital by March," Bhatt said here.

At present RBI holds 59% in SBI and according to provisions of the SBI Act it cannot fall below 55%. This provides the bank even in the current Act a small headroom to issue fresh shares.

Reports suggest the proposed amendment might bring down the minimum equity holding that the apex bank must have in SBI to 51%.

Bhat said the bank would raise another Rs 2,000 crore worth of Tier II capital by March this fiscal.

The fresh capital would address the problems posed by deposits not keeping pace with the demand for credit.

This year the rate of growth of domestic deposits is higher than last year and NRI deposits have grown even faster, however, there is still pressure because of increasing demand for credit, he said.