SBI seeks govt nod for rights issue

The State Bank of India (SBI) has sought approval from the finance ministry for its proposed rights issue.

"We have already submitted our proposal to the finance ministry for floating rights issue. Since government's holding cannot go below 51 per cent, the bank is exploring options of a rights issue, in which the central government has to subscribe," said T S Bhattacharya, managing director, SBI.

As on March 2006, government holding in SBI was 59.73 per cent.

"We have approached the government for an in-principle approval. Only after that, we can go ahead with other details including size of the issue," he said on the sidelines of banking conclave organised by FICCI-eastern regional council.

SBI would be able to manage its tier I capital requirement by ploughing back its profit till 2008, while it would raise capital through tier II bonds and foreign currency convertible bonds, he noted.

The bank is eyeing a 25 per cent asset growth in the next few years.

On the other hand, SBI Venture, the newly subsidiary of SBI Capital Markets is in the process of setting up $100 million fund with Softbank of Japan.

"The newly set up subsidiary is in the process of setting up a venture capital fund worth $100 million with Softbank of Japan. They will be floating few more funds in future with foreign collaborator," said Bhattacharya.

Raising $100 million is likely to be completed by August this year, he said.

Speaking on the bank's foreign acquisition plan Bhattacharya said P Bhatt, the newly appointed chairman, would take around three months to firm up the action plan.

"It will be incorrect to say that foreign acquisition has been scrapped, it has just been halted for the moment as the chairman is evaluating options of growth," he clarified.

Meanwhile, Bhattacharya said that by 2007 number of pension holders in the bank would exceed servicing workforce whereas pension bill would exceed salary bill between 2012-14.