“Whether it would be a rights issue, preferential or QIP route... it is still not decided. But one thing has been confirmed through the finance secretary that the bank would be adequately capitalised by 2012,” SBI chairman Pratip Chaudhuri said
Ahmedabad: The country’s largest lender State Bank of India (SBI) on Tuesday said the finance ministry has given an assurance that the bank would be adequately capitalised by March 2012, but it has not yet decided on the route it will take for the same, reports PTI.
“Whether it would be a rights issue, preferential or QIP route... it is still not decided,” SBI chairman Pratip Chaudhuri told reporters here.
“But one thing has been confirmed through the finance secretary that the bank would be adequately capitalised by 2012,” he said.
The government is the largest shareholder of the SBI with an equity stake of 59.4%.
“Our issue is that the government has to take a call what level of ownership it wants to maintain in the bank. If it wants to have 59.4% stake in SBI, then it would be a rights issue,” he added.
“If it (the stake) is to be raised from the level of 59.4%, then it would be a preferential issue and if it has to be lowered, then it has to be through a QIP issue,” Mr Chaudhuri said.
SBI had reported a Tier-I capital adequacy ratio of 7.60% as of June 2011 against the suggested level of 8%.
It is said that such a low Tier-I capital ratio provides an insufficient cushion to support growth and to absorb potentially higher credit costs arising from deteriorating asset quality.
“Our tier-I capital had dropped to 7.6% against desired requirement of 8%...
“We need to grow and in doing that we need to increase our tier-I and the government of India is convinced,” he said while replying to a query on the necessity for re-capitalisation.
“We have presented all our options to the government, but it has its own process of decision making,” he said.
SBI had raised over Rs16,000 crore through a rights issue in 2008. The government’s contribution was in the form of bonds to the bank instead of cash.
The government of India proposes to provide a sum of Rs6,000 crore to enable the public sector banks to maintain a minimum Tier I Capital to Risk Weighted Asset Ratio (CRAR) at 8% this fiscal.
Last year, the capital infusion budget of the government was Rs20,157 crore.
“To put things in perspective after downgrading, we are at the same level as PNB, BOI or any other PSU bank and also equal to some of the leading banks in China like China Construction Bank,” SBI chairman Pratip Chaudhuri informed media persons
Ahmedabad: Country’s largest lender State Bank of India (SBI) today said Moody’s downgrade rating has not impacted it global expansion plans much and it would continue to expand its branch network both domestic and internationally over the next two years, reports PTI.
Last month, global credit ratings firm Moody had downgraded SBI’s financial strength by one notch to ‘D+’ from ‘C-’ on account of its low tier-I (equity) capital ratio and deteriorating asset quality.
“To put things in perspective after downgrading, we are at the same level as PNB, BOI or any other PSU bank and also equal to some of the leading banks in China like China Construction Bank,” SBI chairman Pratip Chaudhuri told reporters here.
“So, that has not impacted us much. What we are looking at expansion is whether the markets offer us opportunities.
Right now we are opening a branch in Saudi Arabia and one in Qatar from where opportunity of remittances is high,” he said.
“Next we are looking at countries like Australia and New Zealand,” Mr Chaudhuri said.
“On an average 40-50 overseas branches shall be opened over next two years. On large scale, SBI's new branches shall be opened in Nepal, besides Australia, New Zealand, for which we have retail banking licenses,” Mr Chaudhuri said.
“The bank plans to open eight new branches in London by 2012 as every two months a new branch shall be opening and four in Bangladesh also,” he said.
SBI now operates with a network of 165 overseas branches spanning across 34 countries.
“We shall be opening 500 to 1,000 branches in the country, besides installing 10,000 ATMs over the next two years,” Mr Chaudhuri said.
SBI now operates with a network of around 13,500 branches across the country.
“On an average 750 new branches and around 5,000 ATMs per year shall be opened in the country,” Mr Chaudhuri said.
On a visit to Gujarat to address the chief general managers (CGMs) conclave, Mr Chaudhuri met thirty senior executives of the bank, including CGMs of 14 different circle and 13 CGMs from its corporate business wing to take stock of the current scenario and take feedback on future strategies.
In its submission to the Supreme Court, TRAI has submitted a number of models for calculating IUC, but it has suggested that termination charges should be completely removed by 2014. At present, termination charge is 20 paise per minute and it forms a part of mobile tariffs
New Delhi: In a development that would bring mobile telephone tariffs further down, the Telecom Regulatory Authority of India (TRAI) has suggested doing away with termination charges in a phased manner over the next three years, reports PTI.
Termination charges, a part of Interconnection Usage Charges (IUC), are a levy paid by one operator to another on whose network a call ends. Any change in it will have impact on mobile tariffs.
At present, termination charge is 20 paise per minute and it forms a part of mobile tariffs.
In its submission to the Supreme Court, TRAI has submitted a number of models for calculating IUC, but it has suggested that termination charges should be completely removed by 2014.
“It is felt that it will take another two years for asymmetries in traffic flows to converge to some form of equilibrium between new and old operators, especially with an enabling termination charges regime with termination charges set at lower levels than at present,” TRAI said in the affidavit submitted to the Supreme Court.
A final decision on the issue will be taken by the apex court.
GSM operators are opposing any move to reduce termination charge, while the CDMA players and new operators together are supporting any move for complete removal of the levy.
The move to reduce the fee has been opposed by incumbent operators as they stand to lose revenue. But new players are in favour of a low termination rates because for them the net outflow of traffic is more than incoming calls.
TRAI is of the opinion that there should be a progressive reduction in termination charges finally converging to zero termination charges i.e. Bill and Keep (BAK) at the end of two years from now, it added.
TRAI said establishment of a clear three-year outlook for IUC would provide regulatory predictability and enable service providers to plan their networks and businesses accordingly.
In the meantime, TRAI is of the view that the termination rates arrived at through pure long run incremental cost (LRIC) method may be made applicable now which will glide towards BAK in two years.
“This will give sufficient time to operators to adjust to the changes in the termination regime and will ensure a smooth transition,” TRAI said.
New players are likely to benefit from such reductions since they are likely to be the first ones to drop tariffs, which would then put pressure on incumbents to follow suit despite being negatively affected by lower charges.
The Supreme Court had earlier directed TRAI to evolve a new set of interconnection charges between operators for carrying calls of one network through others.
The apex court had given its direction on a petition by TRAI challenging the TDSAT order, which had set aside the TRAI’s Interconnection Usage Charges (Regulation), 2009.
The TDSAT had set aside TRAI’s 2009 IUCR on a host of petitions by various mobile service providers objecting to the telecom regulator’s order.
In its 2009 IUC regulation, TRAI had fixed a mobile termination charge (MTC) at 20 paise per minute for all local and national long-distance charges.
It had also raised the MTC for incoming international calls to 40 paise per minute from 30 paise, while putting a ceiling on carriage fee of 65 paise per minute for domestic long-distance calls.