In an exclusive interview with The Financial Express, SBI chairman MS Verma said on Friday the bank will participate in takeover funding provided there is proper collateral. According to him, there is "no law that prevents banks from funding takeovers. It's the mindset which comes in the way. We are ready for funding proposals in this category. We will definitely help those corporates (by lending funds to them) which approach us," Verma said.

With Sebi's takeover code in place, the bank does not need any permission from any other authority if it wants to fund takeovers, Verma said.

``The new takeover code is absolutely clear on all aspects and can guide our actions,'' Verma said. There is no problem in participating in any merger or acquisition activity if the project is drawn up well and the bank's money is secure, he said. The bank is not averse even to the idea of long-termtakeover funding.

"If the bank is satisfied that merger or acquisition of a particular company is in the interest of the companies involved, it will go ahead with the proposal to fund it. All that we will ensure is that it is a good proposition and the unit will make money and is able to repay our debts," Verma said. "There is no difficulty in doing that," he added.

Asked whether SBI will fund India Cements' bid for Raasi Cement, if approached, Verma declined comment on this specific case. But he said SBI as a matter of policy would "consider even 100 per cent funding." The SBI chairman said: "My first question to any party (seeking takeover funding) will be: what securities can you offer the bank to cover the risks we are prepared to take?" Unlike term-lending institutions which are against funding hostile takeovers, SBI is prepared to consider all kinds of takeovers -- friendly or otherwise. "We will simply go by our assessment about who will add to shareholder value," Verma said, adding thatinefficient companies cannot be protected any more. Funds for merger and acquisitions can be provided from the usual lendable resources and it is not necessery to have a separate fund for this purpose, he said.

According to sources, SBI has started coordinating with its investment banking arm -- SBI Caps -- which provides advisory services on M&A to corporates. The bank has received a few M&A proposals and is actively considering them, sources said.