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Govt to decide on SBI Rs 20K cr rights issue within 15 days

Govt to decide on SBI Rs 20K cr rights issue within 15 days
PTI
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First Published: Thu, Nov 11 2010. 03 31 PM IST
Updated: Thu, Nov 11 2010. 03 31 PM IST
New Delhi/Mumbai: The government on Thursday said it will take a call within a fortnight on whether SBI should be allowed to go for the rights issue, which is expected to be in the range of Rs18,000-21,000 crore, less than the original estimate.
“We are number crunching that (SBI proposal of Rs20,000 crore rights issue) at this point of time. I think some decision would be taken perhaps in next 15 days,” financial services secretary R Gopalan said on the sidelines of an event by consultant Skoch here.
He said the presumptions under which the additional requirement has been asked for are being looked into by the government.
“So, amount in any case is dependent on what we arrive at along with SBI. As to how valid those presumptions are, so that exercise is on at this point of time,” Gopalan said.
“So once that is there, the next question is what form will we be doing in. That is also being discussed with SBI,” he added.
The government holds about 59% stake in SBI. If it clears the proposal, the government will have to subscribe the issue to the extent of its holding, so as to maintain its stakeholding at the existing level.
Depending on the decision taken, Gopalan said there could be implications on the budget.
“There can be implications on budget or it can be neutral on budget, so we will take a view,” he said.
If the government decides to subscribe to the rights issue in cash, it will have to go for additional expenditure. However, if it decides to subscribe the issue through bonds, the effect may be felt later.
The decision will be taken in the current fiscal. However, disbursement can be made either during this fiscal or next fiscal subject to the decision made, Gopalan said.
However, SBI exuded confidence that rights issue will happen this fiscal.
“I expect the approvals from the govt to come this month and the issue will definitely come out this fiscal,” SBI chairman O P Bhatt said in Mumbai.
He said the government has accepted that SBI needs capital.
“We had asked for a rights issue of Rs24,000 cr, but as the government will have to contribute around Rs12,000 cr ... there’s a budgetary process involved, starting with due diligence and other studies, which are being carried out. The final issue size would be around Rs18-21,000 crore,” Bhatt told reporters on the sidelines of international banking and finance conference.
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First Published: Thu, Nov 11 2010. 03 31 PM IST
More Topics: SBI | Goverment | Rights Issue | R Gopalan | O P Bhatt |