State Bank of Mysore to raise Rs 600 cr via rights

State Bank of Mysore (SBM) will raise Rs 600 crore from rights issue, under which more equity will be offered to the existing shareholders to augment its capital base and meet the Reserve Bank's solvency norms.

"The objects of the issue are to augment our capital base to meet the capital requirements and growth in our assets, primarily our loan and investment portfolio," SBM said in the draft letter of offer filed with market regulator the Securities and Exchange Board of India (Sebi).

State Bank of India (SBI) holds over 92 per cent equity in SBM, which is one of its six associate banks.

Although the bank, which posted a net profit of Rs 337 crore in 2008-09, meets the prescribed capital adequacy ratio, with increase in business SBM would require additional capital as per the Basel II norms.

The net worth of the bank as on March 31, 2009 stood at Rs 1,671 crore.

The bank has authorised capital of Rs 500 crore but paid up capital is only at Rs 36 crore.

The draft letter, however, did not disclose the number of shares which SBM will offer as part of rights issue.

SBM shares were down 1.48 per cent at Rs 693.75 on the Bombay Stock Exchange.