Govt not considering equity dilution in SBI

The government currently has just over 59 per cent stake in the bank which it acquired from the RBI last year.

There were speculations in the market about the country's biggest lender seeking the government's nod to tap the market for raising capital for meeting its growth plans.

Official sources said the bank has sufficient resources to meet its growth plans and it does not require a fresh injection of funds through equity sale unless it wants to acquire a financial entity.

"There is no proposal at the moment from SBI to raise funds from the capital market which would result in dilution of the government's stake in the bank," the sources said.
In fact, the Government can reduce its stake to only 55 per cent in SBI as a bill to allow it to shed equity up to 51 per cent has lapsed and it is yet to be introduced again in Parliament.

SBI has a capital adequacy ratio 14.25 per cent as of March 2009, against the regulatory requirement of 9 per cent.

The SBI share moved up 1.91 per cent at Rs 1,725.90 on the BSE on Thursday.

Moreover, the bank has enough headroom to raise capital from Tier I and Tier II bonds to meet its growth requirement, the sources added.

SBI has said that it could raise Rs 28,000 crore from tier I and tier II bonds to fund business growth during the current fiscal.

The government had earlier introduced the State Bank of India Amendment Bill in the Lok Sabha so that it can reduce its holding to 51 per cent. However, the Bill lapsed with the expiry of the 14th Lok Sabha and will now have to be re-introduced.

The proposal to introduce the bill again in Parliament is under consideration of the government.

Earlier, Finance Minister Pranab Mukherjee had said in his Budget speech that while selling the shares of state-run companies to the public, 51 per cent holding will remain with the government, especially in banks and insurance companies.

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