Kalaignar TV gets licence to launch new channel Murasu

Source:IIFL: Capital Market :9:48am :may 30.2011



Two new channels to be launched under the brand name Murasu

Following the arrest of Kalaignar TV promoter-Kanimozhi, managing director-Sharad Kumar and fearing that the Enforcement Directorate (ED) may cancel the license of the channel, the management of Kalaignar TV has obtained a license to launch a new channel. The new channel will be launched once the ministry of information and broadcasting cancels the license of Kalaignar TV and it goes off air. The ministry has granted the management to start the new channel under the brand name Murasu. According to sources, to start off with the management will launch one news channel and one entertainment under the name Murasu. Kalaignar TV is owned by the Dravida Munnetra Kazhagam (DMK) chief-Karunanidhi's family. The ED, which is probing the 2G-spectrum scam now may likely cancel the license of Kalaignar TV since its promoter and daughter of DMK chief M. Karunanidhi, Kanimozhi and its MD-Sharad Kumar, who each have 20% stake in Kalaignar TV, were by named CBI as co-conspirators in the 2G spectrum scam after it traced an illegal money transfer of Rs. 200 crore between the real estate firm-DB Realty and Kalaignar TV. Following which, the CBI arrested them on 20 May 2011.

Interview : Central Bank Chairman

Source :interview InBloomberg UTV:live mint :Thu, May 26 2011. 11:18 PM IST



Mumbai:S. Sridhar, chairman of Central Bank of India, which has turned 100 this year, says the bank is changing for the better. In an interview, Sridhar, who will hang up his boots next week, says the bank has huge legacy issues, but now in certain businesses it is giving other banks a run for their money. 


Edited excerpts:


You are celebrating your centenary year. In the 1980s and early 1990s, Central Bank of India was the third or fourth largest Indian bank by assets, which has now slipped to 11th. Even Axis Bank Ltd has overtaken you.


There is no correlation between age and ranking. Besides, ranking can be on different parameters and not necessarily on the size of assets. It’s true that Central Bank has fallen from its high stool. It was No. 1 private sector bank at the time of nationalization in 1969. There are many reasons such as proliferation of unions, the inability of the management to be able to craft a strategy that was in line with the changing market conditions. But fact of the matter is that we did not do well. The bank did not change itself to adjust to the post-liberalization economic forces.


In March 2009, when you took over, you had said you would change the bank.

Improving operations: Sridhar says the growth in Central Bank’s housing loan portfolio has been fairly significant. Ashesh Shah/Mint

Financially, I think there has been a sea change from when I took over and now. But structurally, it’s an ongoing process. It’s a large bank with 35,000 people and the age profile in every category—from the subordinate staff to the general manager level—is more than 50. There is a legacy issue and we have tried to grapple with that and so had my predecessors.




We have been able to bring down our cost of funds from about 6.8% in 2009 to 5.71% today. Our net profit in 2010 grew by 85%, the highest in the bank’s history, even though it was not large compared with other banks. Despite providing about Rs.1,100 crore for pension and other liabilities, our net profit in 2011 has gone up 19%. Had there been a more favourable accounting treatment for the retired staff, our net profit year would have grown by about 80%.
Our net interest income for 2010-11 has grown by 109% and the net interest margin, which was below 2% consistently, was 3.47% in the last quarter.


With the cost of money going up, aren’t you concerned about your margins?


We have been trying to pass on the cost (to consumers). Quarter on quarter there has not only been a reduction in cost, but also an increase in yield on advances. Then, there is a shift in the business mix and we have improved our credit-deposit ratio. Our credit-deposit ratio in 2010 was 66%, up from 60%. In 2011, it rose to 72%.


In some of the critical financial parameters such as return on assets, you are almost at the bottom; price-to-book also is very low. You have underperformed both the Sensex and the Bankex.


When I took over, the share price was Rs30. It had risen to Rs240. Many of my shareholders have congratulated me for having helped them recoup the loss they had suffered and that is why we came out with a rights issue in March, where we priced it at Rs103, at a substantial discount to the market price. I wanted to compensate the investors for what they did not get between 2007 and 2009.


In the past six months, the bank has been in the news for all the wrong reasons. You were the official banker of the scam-tainted Commonwealth Games. Your immediate predecessor has been probed for certain alleged irregularities by the central vigilance commissioner. Your independent director was put behind bars for involvement in the bribes-for-loans scandal in October.


The media always wants to listen to negative stories. I don’t know whether you are aware that Central Bank is one of the 18 Indian banks that made it to the list of top 500 banks featured in terms of brand valuation by the UK’sThe Banker magazine. The press doesn’t want to pick up this type of news.


Our association with the Commonwealth Games has added value to our brand. In any fair and professional investigation of the Commonwealth Games, nothing would have been found against Central Bank and I am saying this with tremendous confidence.


Let’s get out of sports and talk banking.


We have been able to improve ourselves substantially, but we do have a large employee base and that is why some of the per capita numbers are little lower.


The bank is known for militant trade unionism.


In Central Bank, we have a very strong trade union and also multiple trade unions. But I have received the best cooperation from the trade unions. I made a presentation to the trade unions on my revival strategy and asked them to contribute to it. There has been a genuine partnership. At the ground level, more needs to be done and we will do it. We have been able to create asset verticals and you can check in the market (that) in terms of certain verticals, particularly corporate credit, we are giving other banks a run for their money.


You wanted to focus on retail.


The growth in our housing loan portfolio has been fairly significant. We have been growing in the last two years at an average of about 30% and, more importantly, we have tried to bring together a different model. What other banks do is called the “housing loan factory”. We have centralized all the back-office operations and decentralized loan origination at the branch level. This has improved the delivery time and ensured that frauds do not happen.
We have tied up with a few retail finance companies so that our origination is faster. Our weakness is the age profile of employees and we are not aggressive enough on the field, particularly to match the requirement of young professionals. We have somewhere lost out as we did not understand the banking needs of the upwardly mobile classes post-1991. We could not capture those consumers.


Once upon a time, you were an innovative bank. In 1924, you were the first bank to establish an exclusive ladies department to cater to women customers. In 1926, you were the first bank to introduce traveller’s cheques. But now you say you are not aggressive enough. How do you change this?


It’s our failure that we have not been able to communicate to you some of the innovations that we have done. We are the first bank to have introduced the kisan credit card in a smart card form. The farmer can use it for different kinds of loans and not just the crop loan. He can even buy a car, a tractor, repair his house, etc. There are different sub-limits and everything is captured in a chip. The kisan credit card is no longer a piece of paper—it’s a smart card. You can use that to draw money in any ATM of any bank and remit money to anywhere in India.
Second, we are the first bank to launch an education loan scheme for vocational education. All banks today are financing higher education, but there is a need for vocational education because there is a huge skill gap. We are signing a pact with the National Skill Development Corporation and (will) take this forward.
A year and a half back, we were the first bank to tie up with an insurance company to provide lifetime annuity to senior citizens on retirement.


How has your restructured loan book been doing?


Our restructured loan book is only 4% of the total loan book, one of the lowest in industry, and slippage has been only 8%. We didn’t restructure that many bad assets. Our gross non-performing assets (NPAs) have come down to 1.82% from something like 2.75% two years back and net NPAs have come down to 0.65%.


Will you need to set aside more money in coming quarters to clear the entire pension liability?
We have provided exactly as per Reserve Bank of India (RBI) guidelines. RBI has permitted amortization of the second pension option for serving employees and asked the banks to make full provision for the retired employees.
For retired employees, we have provided for Rs570 crore (for those) who opted for pension as the second option. For serving employees, on amortized basis, we have provided about Rs240 crore this year and this will continue for another four years.
About 17,450 employees have opted for the second pension in addition to the people who had already opted for pension at that time of wage negotiations.


You don’t foresee any impact on your profits in the future.


This is a one-time hit we have taken and I am quite optimistic about 2011-12.


Is financial inclusion a drag on your profit?


Initially, we were doing it through our own branches, but now we do through business correspondents. Central Bank’s DNA is financial inclusion because two-thirds of our branches are in rural and semi-urban areas. Right now, it’s a drag on the profits, but we have gone about it consciously. We will start making money from the third year.


After taking over, you launched a clean-up operation as your NPAs were high. Once you step down, will we see the same process get repeated by the new chairman?


I don’t think that I followed the Aurangzeb syndrome— stab the father, the person in front of you. I have tried to provide aggressively because I did want the NPAs to clear, and this had nothing to do with my predecessor. We have been aggressively providing for NPAs.


You spoke about the Aurangzeb syndrome. The relationship between the chairman and executive directors (EDs) of public sector banks is often uneasy, a “saas-bahu” syndrome.


I have had six EDs during my tenure as chairman. I would think our relations were most cordial and this is because I have tried to involve my EDs in whatever I do. The chairman does not have any say in the selection of EDs, and in any organization, if the subordinate sees that the boss neither has any say in selecting him nor in promoting him—because promotion is done by some other committee—this can happen… This is a systematic flaw. Besides, in most banks, the EDs are not business heads even though they are part of the top management. That is another reason why this happens.


You have a master’s in science degree in physics from the Indian Institute of Technology, Delhi. Why did you become a banker?


It was an accident. I had a love affair with physics in the sense that I liked the subject very much and I did well, but somewhere during my master’s, I lost a little bit of interest and I felt that physics was a tough mistress. I have learnt to love banking.


This is an edited transcript of an interview that was first telecast on Bloomberg UTV on Thursday.
tamal.b@livemint.com

Banks are shifting to a technology-based platform to calculate non-performing assets (NPAs) in the fourth quarter

Source : The Telegraph: Monday , May 30 , 2011

Mumbai, May 29: PSU banks are shifting to a technology-based platform to calculate non-performing assets (NPAs) in the fourth quarter — a period the lenders reported fresh defaults and made higher provisioning for bad loans.

Bankers and analysts said the shift to the new platform was one of the main reasons for the rise in bad assets during the fourth quarter.

The new technology is part of the banks’ core banking solution (CBS), replacing the earlier practice of tracking bad loans manually.

According to the Reserve Bank of India’s (RBI) norms, if either the interest or the principal on a loan is overdue for more than 90 days, the account becomes NPA.

Banks have to make provisions, or set aside funds, against such loans.

Last year, the finance ministry had directed PSU banks to identify bad loans with the help of technology rather than manually. The ministry had asked the banks to migrate to such a system by March 31.

This deadline has now been extended till September because of software-related problems.

Indian Bank began moving to the new system from April last year, while the Bank of India, Canara Bank, Andhra Bank are in various stages of implementation with agricultural loans and advances up to Rs 50 lakh yet to come under the platform.

Bankers say by September, the remaining loans will be covered.

Under the technology-based platform, NPAs are tracked on a daily basis through the use of computers.

Bankers pointed out that the earlier practice gave some discretion to the officials, which might have led to lower NPAs.

However, in the system-generated method, NPAs are immediately identified. This is one of the reasons why PSU banks adopting the new system have shown a rise in bad loans.

“It (the new method) certainly leads to transparency and prevents any form of manipulation. Moreover, it gives an accurate picture compared with the manual intervention,’’ says a senior official of the Bank of Baroda (BoB).

A significant part of BoB’s loans are now under the new method.

Manish Karwa, M.B. Mahesh and Nischint Chawathe, banking analysts at Kotak Institutional Equities, recently said in a note that bulk of the slips in the fourth quarter was because of the efforts made by public sector banks towards a stringent recognition platform for non-performing loans that disallowed any manual intervention.

The analysts warned of fresh defaults in the next two quarters.

“We expect more slippages in the first half 2011-12 from this transition as most public sectors are yet to fully complete the transition of their overall loan portfolio.”

Tax evasion: What HSBC really did

 

Source : Money Life :Sucheta Dalal:May 05, 2011 08:46 PM

Top of Form

The British bank lured greedy US-based Indians with schemes that would help them avoid paying US taxes 

The dubious role of HSBC’s (Hongkong and Shanghai Banking Corporation) managers in luring greedy Indian-Americans to dodge US taxes has been virtually buried by the Indian media—probably because HSBC happens to be a huge advertiser. So, while noting its official statement that “HSBC does not condone tax evasion and is cooperating with law enforcement in this matter,” let’s look at what exactly the US Internal Revenue Service (IRS) has alleged.

Vaibhav Dahake, an Indian who became a US citizen in 2006, pleaded guilty to dodging US taxes on bank accounts that he maintained in India. US laws require its citizens to disclose any account of $10,000 (and above) and any income above $10 earned on it. Why was Mr Dahake foolish enough to believe that he would get away? In his guilty plea, he has described how it all started with an unsolicited approach from theBank’s NRI Services Centre at New York. It spoke of high interest rates onbank deposits in India. Once they had Mr Dahake on the line, the officials encouraged him to maintain undeclared accounts in the British Virgin Islands and India (at Thane). He did so from 2001 to 2010 before getting caught.

Mr Dahake told US authorities that the bank managers assured him that he did not have to provide his social security number or fill out any declaration forms. They also assured him that HSBC would not report income from the accounts to the US authorities. The real mischief stems from the fact that it was the bankers who laid out the modus operandi of dodging the US tax system. They asked him to wire multiple cheques of $10,000 to ‘stay below the radar’ of the IRS. Further, he was advised that he must wire funds out of the US by first converting them into other currencies; the bank managers assured him that the fund transfer would not be routed through the US banking system.

It had further advice on how to fly below the IRS radar, to take money back to the US. HSBC had access to Mr Dahake’s Mumbai account through a formal consent from which it offered to issue him cheques of $9,500 each. It also warned that he ought to withdraw just $2,000 at a time and carry some of the money in travellers’ cheques to avoid detection by the Reserve Bank of India as well. That is why the US lawsuit names HSBC managers at Thane and New York as co-conspirators and not defendants. Given how well-oiled the operation was, it is hard to believe that these were rogue managers acting on their own to help customers beat the law. That is probably why HSBC swiftly shut down its two NRI Service Centres in the US. At the time of going to press, Josephine Bhasin, another HSBC client in New York, had pleaded guilty to dodging taxes on $8.30 million. The New Jersey court documents in Mr Dahake’s case make it clear why the IRS feels confident about finding a few thousand Dahakes at HSBC alone.

(This article first appeared in the edition of Moneylife magazine, dated 5 May 2011 that was available on the newsstands on 21 April 2011.) 

SBI, Wipro, Sesa Goa cases are more warning signals for auditors, regulators

Source : Money life :Nagesh kini :May 27, 2011 06:10 PM


The three cases described in separate news reports today, underline the continuing worries over corporate checks and balances 

News reports today highlighted cases against three big names in the Indian corporate world that should be a wake-up call for companies, auditors and regulators. They are State Bank of India (SBI), Wipro and Vedanta-owned Sesa Goa, all three dogged by wrongful accounting that was apparently ignored by the auditors.

These cases are all the more significant in the context of the Satyam Computer fraud, India's biggest corporate fraud that was revealed in January 2009.

SBI was named in one of the reports today, for deviations the Reserve Bank of India (RBI) has detected in the sanction of bridge loans to some telecom companies. Some telecom firms are under investigation over the out-of-turn allocation of lucrative licences.

According to the report, SBI sanctioned a bridge loan of Rs2,500 crore to Unicor without identification of any financial institution for part-financing capital expenditure, pending tie-up of long-term project finance. Also, there was no committed financial tie-up at the time of disbursement of the money, and the roll-out should have been completed within a year of getting the licence in February 2009.

A year later, SBI sanctioned a regular term loan of Rs9,475 crore for the entire project, Rs2,850 crore of which was to replace the earlier bridge loan even when there was no committed tie-up in place. While the remaining Rs6,625 crore was not released, the bridge loan rolled out till December 2010.

Similar bridge loans/bank guarantees were extended to Loop Telecom (Rs725 crore), Datacom Solutions (Rs1,100 crore), Swan/Etisalat (Rs395 crore) and they were either adjusted against regular loans later on, or rolled over. Reliance Communication was sanctioned an unsecured corporate loan of Rs2,500 crore as capex, without any assessment of the credit requirements, even when unsecured loans of this scale were simply not permitted.

The Wipro embezzlement case has gone a step further, with the US Securities and Exchange Commission (US SEC) raising doubts about the competency of company's auditors. According to a report, the US SEC has asked Wipro to prove that its auditor, KPMG India, is independent. In the event that the IT firm is not able to fulfil the directive, it could have to appoint a new auditor and even get its business books audited all over again. Wipro had delayed filing its annual report for 2010 with the US regulator due to an investigation into alleged embezzlement of an estimated Rs32 crore, by one of its employees.

In the third case, the Ministry of Corporate Affairs' Serious Frauds Investigation office has reportedly recommended the prosecution of mining company Sesa Goa on nine counts, for over-invoicing imports by Rs14.60 crore, sales by Rs42.51 crore, exports by Rs1,002 crore and excess payment of agency commission of Rs40.60 crore. The fraud office has also accused the company's independent directors and statutory auditors for not co-operating in the investigation and recommended that they be prosecuted as well.

These are serious deviations constituting misdemeanours by responsible officials of the companies' managements and dereliction of duties by the statutory auditors that does not augur well for corporate governance. Something, that the auditors' body, the Institute of Chartered Accountants of India, will have to look at closely as will the regulators, the RBI and the Securities and Exchange Board of India.

Singapore bank freezes all accounts of Speak Asia

Source :Headlines Today Bureau  | New Delhi, May 27, 2011

All accounts of survey and research company, Speak Asia, have been closed by the Singapore-based United Overseas Bank in India and Singapore. The multi-level marketing company is facing serious allegations of fraud.

This development will lead thousands of members in Chhattisgarh and 19 lakh in India to bear huge losses.

The AGM of Reserve Bank of India, R Maheshwari, has made it clear that Speak Asia has not been granted permission to carry out its operations in India.

All the offices of the company in the city, including the main office in Katoratalab, have been closed. Several members of the company have filed written complaint with IG Mukesh Gupta and SSP Dipanshu Kabra against Speak Asia.

The investors have said that after the closure of company’s account the payment has been stopped and they are not receiving the SMS from Speak Asia which they used to get earlier.

Over 50 thousand people from Raipur, Bhilai, Durg, Rajnandgaon, Bilaspur, Jagdalpur and several other districts had invested Rs 150 crore in Speak Asia.

Speak Asia is the company where consumers pay around Rs 11,000 for a membership which will allow them to conduct some surveys online for the firm.

The members also get paid for filling those surveys. It is believed that the Rs 11,000 investment could be recovered within three months.

RBI no to BASIX, Ratnakar marriage proposal

Source :BS:Manojit Saha & Somasroy Chakraborty / Mumbai May 28, 2011, 0:35 IST


The Reserve Bank of India (RBI) has shot down a proposal for merger of an old generation private sector bank and a new-age microfinance institution.


Kohlapur-based Ratnakar Bank and BASIX, promoted by social entrepreneur Vijay Mahajan, had sounded out RBI for merging their businesses.


While no formal application was made, both discussed the possibility with senior RBI officials, sources said.

The merger would have been the first of its kind, as it would have resulted in a bank buying a microfinance institution.


Bhartiya Samruddhi Finance, a Hyderabad-based microfinance institution, is a group company of BASIX.


However, with microfinance institutions facing a serious crisis due to a crackdown in Andhra Pradesh, their largest market, RBI rejected the proposal.
Interestingly, Mahajan is an advisor to the board of Ratnakar Bank. He advises the bank on financial inclusion.


Mahajan was appointed after the private sector lender overhauled its board in July 2010 by roping in former chief executive of Bank of America’s India business, Vishwavir Ahuja, as managing director and chief executive. After the new board was formed, the bank, which had been quiet till then, said it would expand aggressively.


“There was no formal proposal. It was a discussion on whether a merger could be worked out. This has been put on hold,” said a senior BASIX official. He requested anonymity because of the sensitivity of the issue.



:


RBI sources confirmed the development and said the regulator did not want to risk the financial stability of Ratnakar Bank, as BASIX operated in a sector that had been facing uncertainty of late.


This is despite Bhartiya Samruddhi Finance emerging out of the recent crisis in Andhra Pradesh relatively unscathed. It has opted out of the debt restructuring programme for microfinance institutions and is in the process of raising Rs 1,200 crore through debt instruments such as non-convertible debentures.


Ratnakar Bank also has strong financials. Its capital adequacy ratio was 34.07 per cent according to Basel II norms on March 31, 2010. Its net non-performing assets were below 1 per cent in 2009-10. Deposits stood at Rs 1,585 crore and advances at Rs 1,186 crore.
Earlier this year, it raised Rs 700 crore from investors, including Housing Development Finance Corporation, Cartica Capital and Norwest Venture Partners.


Sources said RBI felt the merger might stress the bank's asset quality.


Mahajan, who is currently abroad, was not available for comment. An e-mail sent to him went unanswered.


Senior Ratnakar Bank officials, including Ahuja, were not immediately available for comment. “We are working with BASIX on capacity building. We are going to continue with it. Vijay Mahajan is an advisor to our board on financial inclusion activities. Beyond that I will not like to comment,” said a senior Ratnakar Bank official.


Sources said the merger would have helped Ratnakar Bank extend its rural reach. It plans to double its network of 98 branches in the next two years. Most of the new branches will be in rural and semi-urban areas.

Aggressive mergers to take a back seat at SBI under new chief Pratip Chaudhuri

Source : ET :Sangita Mehta, May 25, 2011, 03.46am IST

MUMBAI: State Bank of India Chairman Pratip Chaudhuri's voluntary baptism by fire was the first step in his journey to make the 205-year-old behemoth enter the top-50 in global rankings without future earnings shocks. Prudence and caution will take precedence over aggression and innovation. 

Mergers and acquisitions, including those of associate banks, will be on the back burner as the nation's largest lender sets its house in order with higher provisions to smoothen out bumps in the form of bad loans and pension liabilities. 


Chaudhuri said investors may still have to endure some more pain in the upcoming quarters though not of the magnitude of the quarter to March, when SBI reported a net profit of a little over Rs 20 crore. 


"It will be slightly subdued for two more quarters as we have to make a provision of Rs 550 crore each for provision coverage." The good part, he says, is signals which indicate that the bank's net interest margin, a key gauge of efficiency, is on an upward curve. "I see it coming back," he told ET in an interview. 


In the last quarter, SBI reported a 99% drop in net profit to Rs 20 crore while making record provisions of Rs 2,300 crore for bad loans and wage revisions. The bank was also forced to draw down over Rs 9,000 crore from its reserves to provide for huge pension liabilities. 


Net interest margins (NIMs), which declined to 3.3% in the quarter to March, could widen to close to 3.5% as the impact of repricing of loans kicks in. SBI raised interest rates by 75 basis points a few weeks ago after the RBI revised key policy rates in April. It has also raised deposit rates, but mostly for shorter tenures. 

SBI, which under previous chairman OP Bhatt pursued an aggressive strategy to boost market share, will now focus on deposit mobilisation and stepping up lending activity. "It will be back to basics," he said. Chaudhuri, however, said the management will not abandon its pursuit of market share. "It is easy to build market share by paying an outrageous price, but we will not choose the easy way," he said. 


It is also amply clear that Chaudhuri has had a rethink on the strategy relating to the merger of associate banks of the SBI. He said there will be a pause on such mergers until July 2012. 


"It is very much on the table but associate bank mergers are not going to happen in a hurry. It is not because we are not convinced that merger is the right thing, but it is because it requires capital and operational efficiency." The cost of a single merger of an associate bank with the parent would be Rs 1,500 crore in terms of payout on staff benefits. 


The new chairman, a career banker with SBI and who took over from Bhatt in early April this year, has indicated that an overhaul is underway in some of the subsidiaries controlled by the bank such asSBI Funds Management, which is in the mutual fund business besidesSBI Cards and SBI Capital Markets, the investment banking arm of the bank. 

What worries him is the fact that these subsidiaries have underperformed considering the pole position of SBI in the banking sector and a strong brand image. In his assessment, SBI Mutual Fundhad drained the bank's brand equity while the performance of its credit cards subsidiary which has a partnership with GE Capital was disappointing. 

SBI may have been rapped by the regulator for some of its lending to telecom companies but Chaudhuri said that all the firms that the bank lend to were respected and none of the loans which have been disbursed has been classified as a bad loan. 

"In telecom, the biggest asset is licence and licence cannot be pledged as accounting standards do not allow such assets to be treated as fixed assets. I have not come across any compromise," he said. 

Chaudhuri however did concede that in some cases where SBI was the sole banker, there was a dilution in standards. The slippage was more in the conduct of the account rather than in sanctions, he said. The SBI chairman is confident that the Reserve Bank of India will re-assign the top-notch internal rating for his bank which was lowered by a notch by the regulator earlier last fiscal now that the lender has addressed some of the deficiencies pointed out earlier by the RBI. 

According to Chaudhuri, the bank will also review its overseas acquisition strategy. SBI has now come around to the view that an earlier plan to buy out a bank in Indonesia can be jettisoned considering that the country's top lender has a presence there and the realisation that it does not make sense to pay a premium to acquire the bank there. 


Instead, Chaudhuri said that SBI will now target Australia as the market to drive overseas growth. In terms of the growing number of Indian immigrants and the quality of such immigrants, the bank reckons that Australia will be an important business destination. The other compelling reason for expanding in Australia is the ease of entry. Australia allows banks to have a dual presence, in other words operate both as a branch and a subsidiary. 


The management is also confident that capital raising for the bank during this fiscal would not pose problems although there are reports that the government which controls over 58% of the bank's capital may find it difficult to fund it given the need to keep a leash on spending to ensure that the fiscal deficit is under control. The capital raising will have to come partly from retained earnings and partly from the proposed rights offering, he said.