The government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said adding that the current volatility in the stock exchanges would would not impact the offer announced by the bank.

Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in recent days, SBI share was ruling at over 25 per cent premium over the rights issue price.

The scrip was ruling at Rs 2,131.90 in the afternoon trade on BSE on Friday, down 1.08 per cent from Thursday’s close of Rs 2,155.20.

Under the issue, existing shareholders would get one for every five shares they hold. SBI will raise Rs 16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.

Clearing the SBI’s rights issue, the Union Cabinet had earlier decided to contribute around Rs 10,000 crore for its 59.73 per cent stake, but this would not come in cash. Instead, the government will issue SBI an equivalent sum of bonds. Under the plan, SBI will eventually be able to redeem the bonds for Rs 10,000 crore at the end of yet-to-be-defined tenure. “We get the shares, and pay for it later,” Finance Minister P Chidambaram had said earlier.

Once the bonds are issued, the government will pay an interest on them, which amounts to Rs 790 cr a year.
This payment, he had said, will be more than offset by taxes and dividends that SBI will pay the government.