SBI to securitise loan assets worth Rs 50,000 cr

Mumbai, Mar 20 (UNI) State Bank of India (SBI) will sale as much as Rs 50,000 crore of its loans assets towards securitisation in the next couple of years in order to maintain liquidity for financing new assets in the growing economic activities of India, SBI Chairman A K Purwar today said.

Talking to newspersons at the sidelines of the Asia Society's Corporate Conference here, Mr Purwar said that SBI needs substantial amount of funds to provide credit to the enlarged industrial and manufacturing sector of the economy.

''This fiscal, our credit growth is as high as 30 per cent as compared to the previous year'', he said. SBI's total loan assets are about Rs 202,000 crore as on March, 2005.

In fact, SBI would be floating bonds worth of Rs 3,000 to Rs 6,000 crore next year for raising resources besides going for refinancing of assets from apex bodies like Nabard, SIDBI and National Housing Bank.

The resource pressure on the banking industry is growing tremendrously and it is become difficult for the promoters including public sector banks to hold substantial equity stake in the banks.

In his speech at the conference, Mr Purwar said It would be increasingly difficult for the promoters of the banks to keep on holding majority stake, particularly when the demand for banks' resources growing phonomenonly, to meet the demand of the economy as it is poised for sustainable growth in the coming years.

SBI itself is looking eagerly towards amendments of the SBI Act in order to facilitate the dilution of its promoter (Reserve Bank of India) holding from the current 59 per cent, Mr Purwar said.

On the movement of interest rates, he said, though there were growing pressure on liquidity, we need to look for future trend in the resource mobilisation capacity mainly in the areas of securitisation and refinancing. Last year (2005-06), SBI availed a refinance facility worth of Rs 6,000 crore.

The credit demand would continue to rise as India maintains its high growth trajectory, he said.

Mr Uday Kotak, Executive Vice Chairman of Kotak Mahindra Bank, observed that the domestic market capitalisation is poised to touch one trillion USD mark in the next few years with the broadening of the market.

While the equity market is growing at a significant space, he said, a serious effort is needed to develop fixed income market.

There is also an emerging need to integrate the regulation of the equity and debt markets.

Even if the government adopts fuller capital account convertibility of Indian Rupee, he felt, the real challenges would be to develop a convertible bond market and introduction of structured products like capital guarantee bonds or securities.

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