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Funds prop for SBI

New Delhi, Aug. 26 (PTI): The government is expected to provide capital support to the State Bank of India (SBI) during the current fiscal, and a decision in this regard will be taken soon.

“We will capitalise SBI adequately so that the tier-I capital is maintained over 8 per cent, in line with the government’s intent,” official sources said.

The finance ministry received a proposal from the SBI in this regard a few weeks ago.

According to the proposal, the SBI requires Rs 20,000 crore to fund its growth plans over the next two financial years. Based on the proposal, sources said various possibilities were being looked at for the capital infusion. It could be by way of a rights issue, preferential share issue and warrants.

It is too premature to comment on the exact mechanism for the capital infusion as all the options are still being explored, the sources said.

The government is committed to providing adequate capital to all PSU banks to maintain their tier-I capital at 8 per cent and the government’s stake over 58 per cent, the sources added.

As on June 2011, the capital adequacy ratio of the SBI stood at 11.6 per cent.

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