SBI to raise USD 5 bn this year via offshore loans

New Delhi: The country`s largest lender State Bank of India today said it plans to raise USD 5 billion through offshore loans by December.

"We hope to raise USD 5 billion debt by December by means of foreign debt through medium-term notes (MTN)," SBI Chairman Pratip Chaudhury told reporters here.

Speaking on the sidelines of a meeting between Finance Minister Pranab Mukherjee and chiefs of public sector banks here, he said the debt would be raised during the second or the third quarter of this fiscal.

"Right now, we have a total objective of USD 5 billion, but we would like to time the market in the second and third quarters. We will be raising the funds, but there has to be visibility of credit growth. If there is demand for assets, we will go and raise it," Chaudhury said.

MTN is a kind of bond note with a maturity period usually between 5 to 10 years continually offered through various brokers, rather than issued all at once like other bonds.

The SBI chief said the bank is confident of maintaining its net interest margin (NIM), which is a measure of the return on a company`s investments relative to its interest expenses, at 3.5 per cent this fiscal.

"The margins are improving. This current fiscal we have a guidance of 3.5 per cent (NIM) and we are slightly ahead of it. Overall guidance is 3.5 per cent and we are on track," Chaudhury said.

He said SBI is also looking at increasing its credit growth by 16-19 per cent in 2011-12.

Regarding recent hikes in rates, Chaudhury said: "Raising of interst rate has not impacted interest margin."