Mumbai: The State Bank on Friday said it plans to raise between Rs 3,000 and Rs 5,000 crore by way of issuing 10-year retail bonds, to test the market appetite.
"We are looking at issuing retail bonds. This is mainly to test the market. The bonds will have a maturity of 10 years," SBI chairman OP Bhatt told reporters on the sidelines of a conference here today.
Though Bhatt refused to give any timeframe or the size of the issue, the chief financial officer of the bank SS Ranjan said the bank is likely to raise anywhere between Rs 3,000 and Rs 5,000 from the proposed bonds.
The SBI had earlier said it needed about Rs 36,000 crore over the next five years to maintain its capital adequacy ratio at 12 percent and to support business expansion plans.
Meanwhile, Bhatt said though there is surplus liquidity in the system, this would not be the right time for the Reserve Bank to raise its cash reserve ratio (CRR), as credit growth is likely to pick up in the approaching months.
"This may not be the right time to hike CRR. Credit growth is picking up, and excess liquidity is expected to get disbursed in the next few quarters," Bhatt said.
CRR, which is five per cent at present, is the percentage of amount banks need to park with the apex bank as a mandatory requirement.
RBI is scheduled to announce the quarterly review of its annual monetary policy on January 29 and it is widely expected that the RBI will hike CRR at the policy review to suck out excess money from the system.
Bhatt further added that regardless of RBI monetary policy actions, interest rates are unlikely to rise in the next six months, as hiking rates without sufficient demand may hamper banks' business.
Though there is a revival seen in the economic activities, it is too early to say whether this growth will sustain in the medium term, Bhatt said.
PTI
First Published: Friday, January 08, 2010, 20:39