New Delhi: The government will infuse Rs4,500 crore to Rs8,000 crore ($919.7 million to $1.6 billion) of funds in top lender State Bank of India (SBI) by March 2012, D.K. Mittal, secretary of financial services said on Thursday.
State-run SBI, which accounts for one quarter of lending in India, has been reeling under higher provisions for bad loans and lower profits in the last two quarters, has since last year sought as much as Rs20,000 crore from the union government through a rights issue.
SBI expects surpluses earned during the year, apart from government funds, to help boost its Tier-I capital to 9%.
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Its Tier 1 capital was 7.6% at the end of June, below the government’s pledged 8% target in state banks.
Last week, ratings agency Moody’s downgraded SBI’s standalone rating to D+ from C- on a scale of A to E, citing low Tier 1 capital, its recent failure to raise capital and worsening asset quality.