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O P BHATT CHAIRMAN, STATE BANK OF INDIA INDIA'S largest lender, State Bank of India, is in talks with the banking regulator, Reserve Bank of India, to form a holding company that will control the equity of the bank, its associates and also subsidiaries — a move which could lead to a more efficient use of capital.
The SBI Group, which controls close to one-fourth of the country's market for loans and deposits, is the most "ripe", or wellpositioned, among banks to go in for a holding company structure, its chairman Om Prakash Bhatt said in an interview with ET on Wednesday. SBI had pitched for this model a few years ago with both RBI and the government, which is now its dominant shareholder.
A holding company structure will obviate the bank's need to set aside capital for all its enterprises unlike now, when the lender has to assess the risks and assign capital when it ventures into new lines of businesses.
"For us, a holding company makes sense. But how we move to a holding company structure and how we transfer ownership and in terms of act and taxation issues are to be seen," he told ET.
The structure could be one in which the equity of the parent bank and all the associate banks and subsidiaries could be housed. The government's stake of over 50% could be transferred to the holding company, but this would call for changes in the SBI Act. SBI scales down global buy plan
IN THE four years that he headed SBI, where he had started his career three decades ago, the bank has managed to claw back on its market share, especially in the retail segment. The bank is now the country's biggest home loan provider, having pipped mortgage lender — HDFC — through an aggressive home loan scheme, dubbed as a gimmick initially by its rival.
"The elephant is dancing," Mr Bhatt says of the bank, which has assets of over 10 lakh crore and a countrywide network of over 14,000 branches, by a wide stretch the largest.
SBI is now seeking to raise capital of up to Rs20,000 crore through a rights offering to bolster its capital. On the way, however, the bank has chosen to scale down its ambitions of buying a fairly large-sized global peer. "Buying for buying sake does not make sense, and I don't think that SBI is ready to buy a large foreign bank given the management challenges it poses," he said.
The SBI Group, which controls close to one-fourth of the country's market for loans and deposits, is the most "ripe", or wellpositioned, among banks to go in for a holding company structure, its chairman Om Prakash Bhatt said in an interview with ET on Wednesday. SBI had pitched for this model a few years ago with both RBI and the government, which is now its dominant shareholder.
A holding company structure will obviate the bank's need to set aside capital for all its enterprises unlike now, when the lender has to assess the risks and assign capital when it ventures into new lines of businesses.
"For us, a holding company makes sense. But how we move to a holding company structure and how we transfer ownership and in terms of act and taxation issues are to be seen," he told ET.
The structure could be one in which the equity of the parent bank and all the associate banks and subsidiaries could be housed. The government's stake of over 50% could be transferred to the holding company, but this would call for changes in the SBI Act. SBI scales down global buy plan
IN THE four years that he headed SBI, where he had started his career three decades ago, the bank has managed to claw back on its market share, especially in the retail segment. The bank is now the country's biggest home loan provider, having pipped mortgage lender — HDFC — through an aggressive home loan scheme, dubbed as a gimmick initially by its rival.
"The elephant is dancing," Mr Bhatt says of the bank, which has assets of over 10 lakh crore and a countrywide network of over 14,000 branches, by a wide stretch the largest.
SBI is now seeking to raise capital of up to Rs20,000 crore through a rights offering to bolster its capital. On the way, however, the bank has chosen to scale down its ambitions of buying a fairly large-sized global peer. "Buying for buying sake does not make sense, and I don't think that SBI is ready to buy a large foreign bank given the management challenges it poses," he said.
1 comments:
Good point, though sometimes it's hard to arrive to definite conclusions
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