SBI rights to open on February 18; to raise over Rs16,000 crore

08 February 2008

Mumbai: The Rs16,000 crore ($4.2 billion) rights issue of the State Bank of India (SBI), the country's largest lender, is slated to open for subscription on February 18, finance ministry sources said.

The rights offer is likely to open around the middle of February and remain open for subscription for a month, sources said.

SBI plans to raise Rs16,736.31 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 option scheme.

SBI will raise its issued capital from Rs526.30 crore to Rs 650.00 crore.

The government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said. The government's contribution of around Rs10,000 crore for its 59.73 per cent stake would, however, be made in the form of a bond issue.

Once the bonds are issued, the government will pay an interest on them, which would amount to Rs790 crore a year. This payment, however, will be more than offset by taxes and dividends that SBI pays the government, according to finance minister P Chidambaram.