SBI to get Rs 7,900 cr from govt by next month-end

State Bank of India (SBI) has said it will issue fresh shares to the Government of India on preferential basis to raise about Rs 7,900 crore.

The board has approved preferential allotment of equity shares of face value of Rs 10 each to Government of India at Rs 2,181.69, including a premium.

In this connection, it said, based on the floor price of Rs 2,191.69 per share in accordance with the SEBI regulations, the Executive Committee of Central Board of the bank on Thursday fixed the issue price at Rs 2,191.69.

The bank will take shareholders approval in this regard on 19^th March following which the shares would be issued to the government.

Following the capital infusion of Rs 7,900 crore, the government's stake in the bank is likely to increase by up to 2.5 percent.

The capital infusion by the government will raise tier I capital of the bank to about 8 percent.

As of September, 2011, the capital adequacy ratio (CAR) of SBI stood at 11.4 percent. Of this, tier-I capital stood at 7.47 percent at the end of second quarter against the minimum 8 percent level desired by the government.

SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution was in the form of bonds to the bank instead of cash.

In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks.

Most of the public sector banks got capital support from the government last fiscal. These banks included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.