SBI to seek govt’s nod for rights issue this month

SBI to seek govt’s nod for rights issue this month

New Delhi: State Bank of India (SBI) will seek the government’s nod to raise 20,000 crore through the rights issue within this month, the bank’s chairman Pratip Chaudhuri said today.

“Draft proposal (for the rights issue) is with us. We are going to submit it this month to the ministry," the bank’s chairman Pratip Chaudhuri told reporters here.

The government would continue to hold 59% stake in the bank after the rights issue, he said, adding “as of now there is one proposal which is on the table".

SBI had earlier announced its intention of coming out with the rights issue in the last quarter of FY’11 and had said it is looking at raising up to 20,000 crore through it.

The government, which owns 59.4% in the bank, will have to contribute up to 12,000 crore to subscribe to the issue. It was earlier reported that the Department of Financial Services had cleared the issue but considering the large outlay from the government, it required some budgetary support or approvals.

SBI has earlier said the rights offering is being planned, keeping in mind the pace of growth in the economy.

The bank had raised over 16,000 crore through a rights issue in 2008, which was well received, even though it came after the Lehman Brothers collapse, which had shattered investor confidence.