SBI to consider fund raising through FPO, QIP next fiscal

“We should understand that government cannot keep on pumping in capital (in public sector banks) without any limit. So, we would explore the possibility of FPO or QIP next fiscal after due consultation with the government,” SBI chairman Pratip Chaudhuri said

Gurgaon: Sate Bank of India (SBI), the country’s largest lender, on Sunday said it would explore the possibility of raising capital through a public offer or from institutional investors next fiscal even as it is getting Rs7,900 crore support from the government by end of this month, reports PTI.

“In the next fiscal beginning April 2012, we would discuss with the government for dilution of its stake through a FPO (follow-on public offer) or QIP (qualified institutional placement),” SBI chairman Pratip Chaudhuri said here.

“We should understand that government cannot keep on pumping in capital (in public sector banks) without any limit. So, we would explore the possibility of FPO or QIP next fiscal after due consultation with the government,” he said.

For raising the Tier I capital of the bank, the government has agreed to infuse capital to the tune of Rs7,900 crore by 31 March, 2012.

Post capital infusion, the government holding in the bank would rise to 62%, from about 59% at present.

As per the existing regulation the government holding cannot come down below 51%.

So there is headroom for stake dilution of about 11% in the bank, he said, if the government permits, the bank may go in for raising capital.

Terming 0.75 percentage cut in Cash Reserve Ratio (CRR) a week ahead of the mid-quarterly review of monetary policy on 15th March as a ‘surprise,’ he said this would help easing liquidity pressure on the system.

“I don’t think that RBI would take further action the policy review (on 15th March),” he said.

The apex bank slashed CRR, the percentage of deposits that banks have to keep with the RBI, from 5.5% to 4.75% on 9th March. With this, the central bank infused Rs48,000 crore into the economy.

On the issue of fresh lending to Kingfisher Airlines, he said, “there is need for fresh capital. I think the management of the airline is alive to the issue and would make all effort to get fresh capital.” 

Asked if SBI participated in the recent ONGC share sale, Mr Chaudhuri said the bank did participate in the offer for sale. He, however, refused to divulge details of share purchase made by the bank.

Of the 42.04 crore shares auctioned earlier this month, state-owned insurance giant LIC picked up 37.71 crore shares in ONGC.

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RBI policy rate cuts to depend on inflation scene: PMEAC chief

“I think that (policy rate cut) will depend very much upon how inflation behaves. But this present decision of cutting the cash reserve ratio (CRR) by 75 basis points is an important step towards easing of the monetary policy,” Prime Minister’s Economic Advisory Committee chief C Rangarajan said

New Delhi: Terming the Reserve Bank of India’s (RBI) action to infuse liquidity ‘appropriate’, prime minister’s economic advisory panel chief C Rangarajan on Sunday said policy rate cuts by the central bank would depend on inflation movement, reports PTI.

“I think that (policy rate cut) will depend very much upon how inflation behaves. But this present decision of cutting the cash reserve ratio (CRR) by 75 basis points is an important step towards easing of the monetary policy,” he told PTI, when asked about RBI's possible course of action in its mid-quarterly review this week on 15th March.

The apex bank in a surprise move slashed CRR from 5.5% to 4.75% on Friday, a step that will infuse Rs48,000 crore into the economy.

“I think there is tightness in the market. This tightness may even be stronger towards the middle of month when tax payments are also due. Therefore, given all these factors, I think this action (slashing CRR) of RBI was appropriate,” Mr Rangarajan said.

The RBI had said that the measure was aimed at reducing the liquidity deficit (which) is expected to increase significantly during the second week of March on account of advance tax outflows and the usual frontloading of cash balances by banks with the Reserve Bank.

The last date for advance tax payments is 15th March and is estimated to drain out Rs60,000 crore from the system.

RBI had last reduced CRR by 0.5 percentage point on 24th January thereby injecting Rs32,000 crore into the cash-strapped system.

With the latest decision, the RBI would be injecting around Rs80,000 crore into the economy in less than 40 days.

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SEBI favours checks on ‘independent’ research analysts

Among the proposed measures, independent research analysts could be asked to make extensive disclosures regarding their incentive structure, shareholding pattern, market dealings, and various direct and indirect business interests

New Delhi: Fearing share price manipulation with the help of certain ‘independent’ research reports on Indian companies, market watchdog Securities and Exchange Board of India (SEBI) may soon bring all kinds of research analysts under its regulatory ambit, reports PTI.

The research analysts attached with brokerage firms, fund houses, investment banks and other market intermediaries are currently governed by SEBI regulations, but there are no comprehensive rules that could also cover third-party or independent analysts.

In a board meeting late last year, SEBI had discussed the need to have a comprehensive set of regulations for research analysts. The regulator is now working towards brining greater accountability in the conduct of independent analysts as well, a senior official said.

SEBI would also look at creating greater awareness among investors, and public in general, about doing their own due diligence before taking any decision based on these reports.

A major area of concern in regulating independent analysts is the fact that it could amount to putting curbs on expression of opinion, the official said.

It has also been felt that the research reports as such might not be violating any rules, but they might be used by vested interests for stock market manipulations.

The official said that SEBI as such looks into the issued raised by these reports about the Indian companies, but it has also come across certain instances where bear cartels have used the negative issues raised in these reports to beat down the share prices.

At the same time, positive reports have been used to push the prices higher as well, he added. While he refused to name any particular research firm, saying it could hinder its oversight mechanism, reports from one particular overseas research firm has raised serious concerns about a few Indian groups in the recent months.

However, research on its own cannot generate sufficient revenue to sustain its existence; therefore, it has to rely on other parts of the organisation. This could lead to conflict of interest in their functions, he added.

Among the proposed measures, the analysts could be asked to make extensive disclosures regarding their incentive structure, shareholding pattern, market dealings, and various direct and indirect business interests.

Various registered market intermediaries are already required to put in place certain ‘Chinese Walls’ to avoid any conflict of interest arising out of the reports published by their equity research units.

The new rules could also prescribe mechanisms to ensure that the research analysts’ trading activities or financial interests do not prejudice their reports.

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