SBI to enter market to raise Rs15,000 crore

State Bank of India (SBI), the country's largest lender, is planning to raise Rs15,000 crore from the market either through a follow-on public offer of rights shares or private placement, including a qualified institutional placement, to fund its capital and business needs.

The announcement comes after the government said it would allow its stake in state-run banks to fall to as low as 52 per cent. Government holds 58.60 per cent stake in SBI at present.

The board of SBI has decided to raise additional equity capital taking advantage of the enabling provision, the bank said in stock market filing.
"The committee of directors for capital raising has decided to seek government or RBI approval for raising capital up to Rs15,000 crore by way public issue...," SBI said in a statement.

SBI said it required additional capital to match the anticipated growth in asset and comply with stipulated level of capital adequacy.

SBI is weighing various options, including, qualified institutional placement, rights issue, private placement, global depository receipts, American depository receipts or a combination of these.

Reports quoting SBI chairperson Arundhati Bhattacharya said the bank was unlikely to rush with its plans and may take up to a year's time to raise the necessary funds.  It is most likely that the funds are raised in smaller amounts.

''If we seek permission at the actual time of raising capital, investors start taking positions on the stock. It is not necessary that we will have to raise the full amount, but we are seeking permission for the maximum amount because it gives us a lot of elbow room,'' she said.

SBI further said the board is yet to decide on the quantum and mode of issue, number of tranches, price/prices, discount/premium, reservations to employees, customers, existing shareholders etc.

SBI raised a little over Rs10,000 crore last year, including Rs8,032 crore through sale of shares via qualified institutional placement and government infusion of Rs2,000 crore. Earlier, in 2008, SBI had raised over Rs16,000 crore through a rights issue when the government had issued bonds against rights shares, instead making cash payments.

The government has plans to infuse Rs11,200 crore capital into various public sector banks, including SBI, probably before the end of the current fiscal.