20000 CRORESPUBLIC ISSUE BY STATE BANK



India's largest lender State Bank of India (SBI) plans to raise up to Rs20,000 crore through a rights equity issue in 2010-11, about half the amount it needs to sustain growth over the next five years, chairman O.P. Bhatt said on Wednesday.
The bank would need to raise Rs40,000-50,000 crore to feed demand for loans over five years in the fast growing economy, Bhatt said.

"If we can raise half of it any- time during the next 12-18 months, it will be great," he told reporters on the sidelines of a banking technology sum- mit.

The rights offering will need the support of the government, which owns around 60% of the bank.

"Our rights issue can be suc- cessful only if government subscribes to it," Bhatt said, adding the bank will start working with the government after the Budget on Friday that is expected to provide clarity on capitalization plan for state-run banks.

Shares of the bank, which has a market value at $26.3 bil- lion (Rs1.22 trillion), have dropped 15.5% so far this year, more than a 6.8% fall in the benchmark Sensex index.

Bhatt also said telecom firm Bharti Airtel Ltd is in talks with SBI to fund its $10.7 billion bid to acquire most of the African assets of Kuwait's Zain Tele- com. "Bharti is in touch with us," Bhatt said, but declined to give details on the quantum of loan sought by Bharti.

Bharti and Zain are in exclu- sive talks till 25 March for the proposed deal. As per the transaction, Bharti would buy Zain's African assets except those in Morocco and Sudan.

Bharti had approached SBI last year, too, when the Indian telecom company was pursu- ing a deal with South Africa's MTN Group Ltd, which did not go through.

SBI is also eyeing a signifi- cant stake in Tata Motors Fi- nance, the vehicle financing arm of Ratan Tata-led enter- prise Tata Motors Ltd.

"Our investment committee would like SBI to partner in the deal and invest some amount.
Before that, however, we need RBI (Reserve Bank of India) clearance," Bhatt said.

The public sector lender would pick up a significant stake but not a majority in the Tata group company, he said.