Government to take call on SBI rights issue

NEW DELHI: Government is likely to take a decision on public sector lender State Bank of India's proposed plan to raise about Rs 18,000 crore through a rights issue in the next fortnight.

"It is likely that government would take a call on the capital raising plan for SBI in the next 15 days," official sources said.

"The issue is awaiting the Finance Minister's approval. Once that is done, it will put it up before the Cabinet, which is likely to be done before Parliament begins its winter session," the sources said.

With Parliament session likely to be advanced to November 14 because of upcoming Gujarat elections, a note on SBI's capital raising plan may be put up before the Cabinet within a fortnight, they said.

The Government will have to get Parliament sanction to subscribe to the issue, which is likely to cost it about Rs 10,000 crore. The bank is likely to raise Rs 17,000-18,000 crore through the rights issue to meet regulatory requirement and business growth, the sources said.

Although the rights issue would not change the shareholding pattern, the unsubscribed portion of the issue by existing retail shareholders could increase the government share in the country's biggest lender.

Government's stake in SBI, which is currently at 59.73 per cent, could go up after the rights issue if some investors did not take up the offer. Retail investors currently have around four per cent shares in SBI.

Source: timesofindia.indiatimes.com