SBI rights issue by fiscal end: Chaudhuri

The much awaited rights issue of the countrys largest lender,State Bank of India,may hit the market in the third or fourth quarter.

The much awaited rights issue of the countrys largest lender,State Bank of India,may hit the market in the third or fourth quarter,said the banks chairman Pratip Chaudhuri even as he maintained that the bank is adequately capitalised.

The rights issue will take place in this fiscal year itself. It will definitely take place in the third or fourth quarter, said Pratip Chaudhuri,chairman,SBI on the sidelines of the FICCI-IBA Conference on Tuesday. While the bank has been looking at a Rs 20,000 crore rights issue,the chairman declined to confirm the size of the issue.

The bank also seems to be ready with a plan B in case the rights issue does not happen. We may look at retail bond issue if demand picks up, said Diwakar Gupta,chief financial officer at SBI. He however clarified that there are no liquidity issues as of now. SBI will not look to raise funds overseas as the market conditions are not favourable and the investors have turned risk-averse.We will not raise funds overseas in the next month or so because market conditions are unsuitable, said Chaudhuri.

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The bank however maintained that there is no problem on account of the global conditions and the chairman said that the state-owned lender is targeting a credit growth between 16 and 18 per cent for the financial year 2011-12.

While the Reserve Bank of India is looking into splitting the posts of chairman and CEO at public sector banks,Chaudhuri said that it was a good idea.

It however needs to be seen as to what is the selection process for the chairman, said the chairman.

On the issue of variable component in the salaries of the PSU bank employees,Chaudhuri said,While the variable component exists,there is a scope to raise it. It should however be decided in such a way that there is no irresponsible behaviour and is helpful in the long-term.

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SBI is expecting a 21-22 per cent growth in deposits in the current year and would be focusing mobilising more resources from low-cost retail deposits.