Fund infusion: SBI calls shareholders meet on March 19
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The country's largest lender, State Bank of India, has convened a general body meeting of its investors on March 19 to seek approval for the proposed preferential share allotment to the government, the bank said in a regulatory filing today.
The approval is required on account of the recent government decision to infuse Rs 7,900 crore into the bank, which will support its business growth and take its tier 1 capital base to the mandated 8 per cent.
"The date of the general meeting of shareholders to obtain their approval for the.... preferential allotment has been fixed for March 19," SBI said in a filing to the BSE.
It further said it will also take approval from its shareholders for the price of each equity share for the preferential allotment, which will be decided on February 17.
With the capital infusion, the government stake would go up to about 65 per cent, from the present 59.4 per cent.
It will also increase the bank's tier I capital to about 8 percent.
As of September quarter, the capital adequacy ratio of SBI stood at 11.4 per cent. Of this, tier-I capital stood at 7.47 per cent at the end of second quarter against the minimum 8 per cent level desired by the government.
Last year, SBI had submitted a proposal to the government for raising Rs 20,000 crore through a rights issue to fund its growth plans over the next two fiscals.
SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution was in the form of bonds instead of cash.
In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks. Most of the public sector banks got capital support from the Centre last fiscal including Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, Uco Bank and Dena Bank.