SBI to raise Rs20,000 crore; may cut rates

State Bank of India, the country's largest lender by assets, plans to raise Rs20,000 crore in the current financial year, its chairman and managing director O P Bhatt said on Friday.

"We need capital for growth," Bhatt told reporters on the sidelines of a book release in Kolkata. "There are several ways in which we can raise capital. My preferred option would be a rights issue."

Earlier last month, Bhatt had said the bank would need Rs60,000 to Rs70,000 crore over the next five years to fund its growth.

Bhatt also said SBI may review interest rates by May-end as it has seen a steady rise in deposits last fiscal. "Our deposits are growing at fantastic rates; we see an excess of supply over demand," Bhatt said. "We will see if further tweaking of deposit rates is required.

He said that in 2008-09 the bank increased its market share of deposits phenomenally. "Our increase in the market share of deposits last year was the highest seen by any bank anywhere and we are currently getting $200 million a day," Bhatt said.

Asked if the bank was planning to cut its prime lending rate (PLR), he said SBI's lending rates were the lowest in the industry. "Tell me which segment of loan offered by SBI is not cheaper than the industry levels?" he asked.