SBI to submit revised proposal on rights issue in June

Country's biggest lender State Bank of India (SBI) today said it will submit the revised proposal to the government for Rs 20,000 crore rights issue next month.

The bank will file the revised proposal next month, SBI Chairman Pratip Chaudhuri said on the sidelines of an event.

The public sector lender is hopeful of a rights issues this fiscal. Earlier this month, Chaudhuri had said: "The government is committed to well capitalising SBI. So in that context, we are quite hopeful that the rights issue contribution will come through during this year."

Tier-I capital has to come from rights issue itself. So, 59% is the government's holding and balance would be contributed by other shareholders, he had said.

At the end of March 2011, the Tier-I capital of the bank came down to 7.77% due to provision made towards pension fund on account of wage revision - Rs 7,927 crore till FY10 was taken through the capital account.

If the government allows the issue size at Rs 20,000 crore, then it will have to cough up between Rs 11,000 and Rs 12,000 crore towards subscribing the issue to maintain its stake in the bank at 59%.

In the last SBI rights issue, the government had issued bonds to the bank instead of giving cash.

Source: Business Standard