Nod likely for State Bank of India’s Rs
. 8,000-crore QIP or FPO
NEW DELHI: The finance ministry is likely to allow State Bank of India (SBI) to raise around Rs 8,000 crore of equity capital either through a qualified institutional placement
(QIP) or a follow-on issue. "SBI had requested permission for either
FPO ( follow on public offer) or a QIP (qualified institutional
placement). In principle our stand is that banks can explore the markets
provided the government retains majority stake," a senior finance
ministry official said.
If SBI, India's largest bank by assets,
does indeed opt for the FPO route, it would be one of the largest
public issues in recent times. Coal India raised Rs 15,000 crore in 2010
"SBI has submitted a holistic capital raising plan to the finance
ministry," chairman Arundhati Bhattacharya said. She declined to discuss
details.
The finance ministry is also likely to allow four
other state-run banks, including Syndicate Bank, United Bank of India,
and Union Bank of India, to raise capital through the qualified
institutional placement (QIP) route. Three other banks, including Andhra
Bank and Indian Overseas Bank, may raise funds through rights issues.
Nod likely for State Bank of India's Rs 8,000-crore QIP or FPO
The fund raising by the banks is part of the government's programme to
capitalize state run banks. The budget has a provision of Rs 14,000
crore towards this end. The timings and size of the issues will depend
on the bank boards. Another senior SBI official confirmed that the bank
had sought government's approval for a QIP or FPO.
"We have not
got any written approval from finance ministry," the official said. The
permission is expected to be communicated once the file is signed by
finance minister. The government holds 62.31% stake in SBI. Under the
law, government has to maintain at least a 51% stake in stateowned
banks. The government has said it will not let its holding to fall below
58%.
The SBI share closed at Rs 1616 on Wednesday on the
National Stock Exchange, down nearly 30% from a year ago. SBI has
indicated that it will require Rs 4,000 crore out of the proposed Rs
14,000 crore which the government plans to infuse in state run banks
this fiscal.
The finance ministry had recently announced that
additional capital will be provided to enable banks to lend to sectors
such as two wheelers, consumer durables at lower rates in order to
stimulate demand. The ministry has not yet allocated any amount towards
this additional capital.
"A final decision will be taken in
consultation with the banks," the official said, adding that the
government is analysing how much the base rate is impacted when extra
funds are infused. The ministry, however, is keen to push PSBs to
approach the market to raise capital if the government holds more than a
75% stake.
PRAVEEN SHARMA
PGDM IST
Nod likely for State Bank of India's Rs 8,000-crore QIP or FPO
The fund raising by the banks is part of the government's programme to capitalize state run banks. The budget has a provision of Rs 14,000 crore towards this end. The timings and size of the issues will depend on the bank boards. Another senior SBI official confirmed that the bank had sought government's approval for a QIP or FPO.
"We have not got any written approval from finance ministry," the official said. The permission is expected to be communicated once the file is signed by finance minister. The government holds 62.31% stake in SBI. Under the law, government has to maintain at least a 51% stake in stateowned banks. The government has said it will not let its holding to fall below 58%.
The SBI share closed at Rs 1616 on Wednesday on the National Stock Exchange, down nearly 30% from a year ago. SBI has indicated that it will require Rs 4,000 crore out of the proposed Rs 14,000 crore which the government plans to infuse in state run banks this fiscal.
The finance ministry had recently announced that additional capital will be provided to enable banks to lend to sectors such as two wheelers, consumer durables at lower rates in order to stimulate demand. The ministry has not yet allocated any amount towards this additional capital.
"A final decision will be taken in consultation with the banks," the official said, adding that the government is analysing how much the base rate is impacted when extra funds are infused. The ministry, however, is keen to push PSBs to approach the market to raise capital if the government holds more than a 75% stake.
The fund raising by the banks is part of the government's programme to capitalize state run banks. The budget has a provision of Rs 14,000 crore towards this end. The timings and size of the issues will depend on the bank boards. Another senior SBI official confirmed that the bank had sought government's approval for a QIP or FPO.
"We have not got any written approval from finance ministry," the official said. The permission is expected to be communicated once the file is signed by finance minister. The government holds 62.31% stake in SBI. Under the law, government has to maintain at least a 51% stake in stateowned banks. The government has said it will not let its holding to fall below 58%.
The SBI share closed at Rs 1616 on Wednesday on the National Stock Exchange, down nearly 30% from a year ago. SBI has indicated that it will require Rs 4,000 crore out of the proposed Rs 14,000 crore which the government plans to infuse in state run banks this fiscal.
The finance ministry had recently announced that additional capital will be provided to enable banks to lend to sectors such as two wheelers, consumer durables at lower rates in order to stimulate demand. The ministry has not yet allocated any amount towards this additional capital.
"A final decision will be taken in consultation with the banks," the official said, adding that the government is analysing how much the base rate is impacted when extra funds are infused. The ministry, however, is keen to push PSBs to approach the market to raise capital if the government holds more than a 75% stake.
PRAVEEN SHARMA
PGDM IST
No comments:
Post a Comment