State Bank of India expects to get the government's permission to merge State Bank of Indore with itself this month, SBI's Chairman, Mr O P Bhatt, told Business Line on Thursday.

State Bank of Indore has close to 500 branches and deposits plus advances of about Rs 50,000 crore.

Mr Bhatt said that consolidation is good for the banking industry. I would like to see more consolidation, but I don't see that happening, he said.

He said he saw no issues with regards to opposition to the move by the unions.

Rights issue

On the proposed rights issue of the bank, Mr Bhatt said that the bank would need to raise funds and it is better to do it earlier than later. The bank expects to be able to raise Rs 20,000 crore through the rights issue.

The government of India holds 59 per cent in the bank. He said that he had been talking to the Department of Banking asking the government to participate in the rights issue, but State Bank of India is yet to formally write to the government on this.

On the impact of deregulation of savings bank interest rates (the RBI recently said such deregulation should happen), Mr Bhatt said that interest rates would only go up. He said he would not welcome deregulation of savings bank interest rates.

Asked what the State Bank was doing to draw its accounts in accordance with the principles of the International Financial Reporting Standards (IFRS), a global standard that is gaining acceptance the world over that Indian banks should begin to adopt from April 1, 2013, Mr Bhatt said that the bank had engaged consultants.

We would like to do it a year earlier, he said, adding that the bank had to do its accounts by IFRS, it would rather do it early.

On credit offtake, Mr Bhatt said that there was growth in the market but not great. He said that build-up of bad loans was under control in SBI. Our slippages are under Rs 1,000 crore a quarter, he said, noting that the bank's total advances book was Rs 600,000 crore.

At the end of last financial year, SBI had non-performing loans worth Rs 19,500 crore, and net NPAs of Rs 10,900 crore in its books.