The government has cleared a Rs 3,004-crore capital infusion into State Bank of India (SBI) this financial year. However, how this is to be done has not been decided.
"The infusion may come through preferential allotment of equity shares, rights issue or through qualified institutional placement (QIP) or a combination of various routes," Diwakar Gupta, managing director and chief financial officer of SBI, told Business Standard. The bank is to now approach its board of directors for approval.
Gupta says if the infusion is carried out by preferential allotment by SBI to the government, then the latter's stake will increase to 62.4 per cent from 61.58 per cent.
In March, the government had infused Rs 7,900 crore in SBI to increase the tier-I capital of the country's largest bank. Following this, its holding in SBI rose to 61.58 per cent from 59.4 per cent.
The tier-I capital would further increase to 10 per cent from 8.97 per cent as on end-September, following the capital infusion. SBI's overall capital adequacy ratio was 12.63 per cent as on end-September (excluding the addition of first-half profit).
Another state-run lender, Union Bank of India, on Thursday received its board's approval for raising equity via a preferential allotment, rights issue and QIP. Earlier this week, the board had approved raising of additional capital up to Rs 1,500 crore during 2012-13 by issue of tier-I and tier-II capital.
The government is expected to infuse Rs 1,000 crore in Union Bank.
The finance ministry recently approved an allocation of Rs 12,000 crore for various public sector banks, including SBI. It wants PSBs to maintain a minimum tier-I capital of nine per cent, as compared to the regulatory requirement of six per cent.