State Bank to raise Rs 10000 cr by Dec

State Bank of India (SBI), the country's largest lender, plans to raise Rs 10,000 crore through an equity by December 2007.

SBI would have to raise at least a part of the required capital by way of a rights issue, as at the prevailing share price, it can raise only Rs 4,042 crore by diluting the government holding to 55 per cent.

"We want to raise Rs 10,000 crore. We are targeting December but it could spill over. The process (whether we would go for a rights issue or a follow-on offer) is yet to be decided ," said O P Bhatt, chairman, SBI.

The government holding in SBI stands at 59.73 per cent. The bank has room to dilute only 4.73 per cent as the government holding cannot fall below the stipulated 55 per cent.

The bank has already approached the government, as the majority shareholder, to infuse capital into the bank. SBI's share closed at Rs 1,624.15 on the Bombay Stock Exchange, up 0.12 per cent.

"The government would have to infuse capital whether it does it now or two years later. It could choose to do it at a lower share price today, as the price would only go up," said an SBI official.

The bank has not picked investment bankers yet for the share sale, said Bhatt.

In 2007-08, ICICI Bank, HDFC Bank, Axis Bank and Central Bank of India raised a total of Rs 29,016 crore as equity capital.

ICICI Bank had made the biggest offering by an Indian company by mobilising over Rs 20,000 crore through a follow-on public offer and American depository receipts issue.