Mumbai, Aug. 9: India’s largest lender State Bank of India (SBI) plans to hit the market with a rights issue of about Rs 20,000 crore ($4.34 billion), likely in the fiscal quarter ending March 2011, two sources with direct knowledge of the matter said on Monday.
“We have been talking to the government (regarding the rights issue),” one of the sources said. “So formally, we will take it up after this quarterly results, (likely) in the next two weeks,” the source said. The sources declined to be identified.
In June, the SBI chairman, Mr O.P. Bhatt, said that the bank expects to launch the rights issue towards the end of fiscal year 2011. The government holds a 59.4 per cent stake in SBI.
“You have to see at what price the issue is coming up. We like the stock and we already have a buy on it,” said Mr Gaurav Dua, head of research at brokerage Share Khan.
The bank will announce its June quarter result on Thursday.
Last week, the Lok Sabha approved a Bill that enabled government to reduce its holding in the bank to 51 per cent, helping facilitate capital raising for the country’s largest lender.
Under current regulations, the SBI Act allows the government to hold a minimum of 55 per cent.
The formal notification from the government will come after the President assents the bill.