The Chairman of State Bank of India, Mr. O.P. Bhatt has said that the bank would not raise interest rates before the monetary policy statement is announced by the RBI on 20th April. He further said that the hike in repo and reverse repo rate hike is not likely to lead to any immediate changes in the market rate. But this step by the RBI would definitely help in taming inflation.
The bank has said that as per its rights issue is concerned it would be approaching the Government next fiscal for approval to raise capital worth Rs. 20,000 crore via rights issue. The bank had earlier declared that it would prefer a rights issue than diluting Government stake in the entity.
"We will start talking to the government in the next financial year. It will take some time. There is no hurry. We have enough capital. But we take a long-term view, which is why the rights issue. We don't want to hurry at the last moment," Mr. Bhatt said.
Rights issue refers to shares that are issued only to the existing share holders of the company. It is a kind of preference given to the preexisting shareholders. The Government holding in SBI currently accounts to 59.7%. The bank needs to raise capital worth Rs. 40, 000 crores in the upcoming five years so as to meet its expansion goals.
He also said that it is likely that the policy rates may be hiked further in the monetary policy given the increasing trend of inflation. The action to be taken by RBI will entirely depend on the picture inflation portrays, he said.
"We would like to wait till April policy as far as interest on lending side is concerned and if you wait for April policy that means the earlier we would like to change our rates, cannot be before May," he added.