The Finance Ministry today said it is currently examining a proposal by SBI to come out with rights issue, amid speculations that size of the offer may be cut from Rs 20,000 crore as planned by the country's largest lender.
"We have discussed it with SBI. We are still examining it," Financial Services Secretary R Gopalan told reporters on the sidelines of an Assocham event here.
He said the Finance Ministry is looking into the proposal of SBI for rights issue and would take a view on the quantum after going through all the details.
"The ministry has asked it for some details, for some numbers. When we get it, we will let you know," Gopalan said.
Sources in the ministry had earlier indicated that the government may cut down the size of the rights issue depending on availability of resources.
As far as government holding in SBI is concerned, it holds 59.41 per cent stake in the bank, after acquiring RBI's stake in 2007.
A rights issue will normally not lead to a dilution of government equity in SBI. The government's equity will only be reduced if it decides not to participate in the rights issue or does not fully subscribe to its quota.
If a rights issue does not happen, the bank has the option to go for a preferential issue or follow-on offer.
Shares of SBI were trading at Rs 3,187, up 0.21 per cent on the Bombay Stock Exchange.
At the same time, SBI have to put in money for subscribing rights issue of its associate bank State Bank of Mysore.
State Bank of Mysore intends to raise Rs 583.2 crore through a rights issue and SBI owns 92.33 per cent stake in the associate bank.
Thus, SBI would have to shell out about Rs 540 crore for subscribing rights issue to the extent of its holding. Besides, SBI has also agreed to pick up any unsubscribed portion of the retail shareholding.
The existing shareholders would also get three equity for every 10 shares held as on the record date which is September 4, 2010.
The shareholders would have to pay a premium of Rs 530 on the face value of Rs 10 a share.
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