SBI's Rs 20,000 cr rights issue likely in Q1

The country's largest bank State Bank of India (SBI) today said it is likely come out with Rs 20,000 crore rights issue in the first quarter of the next fiscal.

Rights issue is likely to be out in the April-June quarter of 2011-12, SBI Chairman OP Bhatt said after inaugurating the 1000th branch of State Bank of Patiala, one of its associate banks, at village Kaddon here.

However, it is yet to get approval from the government, which holds about 59% stake in the entity. Rights issue are offered to existing shareholders.

If it clears the rights issue proposal, the government will have to subscribe the issue to the extent of its holding, so as to maintain its stakeholding at the existing level.

The bank had last raised Rs 16,736 crore through a rights issue in 2008, which saw its capital adequacy ratio rise above 14%.

Last year in August, Parliament had passed a Bill that would enable SBI to sell shares to boost its capital while allowing the government to reduce its stake to 51%.

This is a departure from the previous requirement wherein the government had to retain at least 55% share in the public sector lender.

Meanwhile, SBI has been raising funds from both the international and domestic markets to fund its expansion plan.

Last month, it issued Rs 2,000 crore retail bonds, which were oversubscribed 8.5 times.

Available in two options, Series 3 bonds have a tenor of 10 years with a call option by SBI after five years and a coupon rate of 9.75% per annum for retail and 9.30% for non-retail applicants.

The other, Series 4 bonds have a tenor of 15 years and a coupon rate of 9.95% for retail and 9.45% for non-retail investors.

In reply to a question, Bhatt said that SBI would provide jobs to 5,000 youths in the next financial year.

The recruitment drive would start in the middle of next financial years, he added.