Need to support SBI's rights issue: FinMin official

The government needs to support the proposed rights issue of State Bank of India (SBI), a top Finance Ministry official said today.

"We need to support the rights issue but in what form and how is yet to be decided," Finance Ministry Secretary (financial) R Gopalan told PTI.

Gopalan said: "We are examining the SBI's proposals to the government to subscribe to the rights issue."

First, it was yet to be decided whether the government would pay in cash or in kind and also whether to bring down the size of the rights issue, he said.

SBI has proposed to raise Rs 20,000 crore from the rights issue to support its credit growth.

On when the government would take a decision, Gopalan said, "I can't tell the exact deadline. It is now being discussed within the ministry and we'll call the SBI."

He added that it might happen this year also.

According to data available with the Bombay Stock Exchange government currently hold 59.41 per cent stake in SBI. The bank had to go for rights issue to raise funds since it cannot be brought down below 55 per cent as per the SBI Act.