State Bank Of India (SBI), India’s largest lender has proposed to raise Rs 5000 crore via right issue by the month of March 2012 to attain the 8% capital adequacy.
Being Government the largest shareholder with 59% equity, SBI has put forward this proposal to the Government. But as of now no official statement has been made by the Government on the right issue proposal.
As per the proposal , right issue will be in the ratio of 60:40, where government and retail investors can invest Rs 3000 and Rs 2000 crores respectively. As per Managing Director and Chief Finance Officer Diwakar Gupta, although SBI needs Rs 20,000 crore in next 2 to 3 years but this first phase of raising capital would help them for meeting norms.
According to the available capital status and asset situation, Moody the global rating agency has degraded the credit rating of SBI from C- to D+. Now to raise the stand alone rating of SBI, they have to raise there tier 1 capital which is 7.6% less than the required level i.e against the 8% level desired by the Government.
Government stated there intent to provide adequate capital to all public sector banks so as to maintain their Tier-I capital at 8 per cent, and it’s stake at over 58 per cent.