It will be the first amongst the public sector banks to do so. The Bank ispoised for a better performance on account of some blessing in disguise,through the rate cuts announced by the central bank. Moreover, the top brasshas taken some serious relook at the prospects.

A string of product launches in the retail segment like credit cards,Internet banking and the recent announcement to install 1000 ATMs by March2002 coupled with the insurance foray should help improve the valuations.Also, the bank is expected to come out with a VRS scheme intending to reduceits bloated workforce by the middle of this year.

SBI has also started work on presenting its accounts as per the US GAAP,eyeing an ADR issue. This follows the government's go-ahead to the bankingindustry for equity float to raise resources from the domestic as well asoverseas sources. The ADR plans fits in well with the government's desire tobring down its holding in PSU banks to 33 per cent. Also, this would providean opportunity for improving the Capital Adequacy Ratio of public sectorbanks.

SBI took the lead in filing for the foray into insurance sector. Thislucrative segment would complement the reach of the SBI and would give it asubstantial boost. Given the comparative strength of the bank, getting theapproval is just a matter of time once the policy dilemmas are clearer. Thebank has announced a Rs 600-crore technology plan envisaging a foray intoe-commerce, e-broking and e-trade by March 2001. This is in addition to thestrategy of phased branch automation and networking online offices, givingthe required technological push. The bank has already appointed KPMG asadvisor for the proposed technology initiatives.

The bank seems strategically well-placed to consolidate its position. It isthe largest bank in the country and has about 8 crore customers and accountsfor roughly 28 per cent of the total deposits and advances in the country.The bank has done better than expected in the gold banking segment,garnering close to 4 tonne gold, till now. SBI is one of the cheapestproviders of housing loans in the country. The deposits and advances standat imposing Rs 169000 crore and Rs 82400 crore at FY 99 end. Although theNPA's at 7.19 per cent are high, the situation could be redeemed this yearsince, the management seems focussed and willing to take major steps towardsit. SBI is striving hard to improve its technological capabilities.

At the 1998-99 EPS of Rs 19.09, the stock is currently trading at a P/E of11.1. The scrip had hit a bottom in mid March 2000 and since then, it hasbeen maintaining buoyancy pertaining to positive moves by the bank. Thebottomline is well-defined and importantly, the scrip has limited riskpotential downside.

-- Sachchidanand Shukla