SBI to get Rs4,000 crore capital infusion this year

05 Nov 2011

1

The State Bank of India (SBI) will get fresh capital to the tune of Rs4,000 crore from the government this year, its chairman Pratip Chaudhuri said today.

SBI may also raise capital from shareholders and own funds, he said, adding that the infusion could happen through a preferential allotment or rights issue.

SBI currently has Tier I capital ratio of 7.60 per cent, against the suggested level of 8 per cent. At this low level, Tier-I capital will not provide sufficient cushion to support growth and to absorb potentially higher credit costs arising from deteriorating asset quality. Banks have to meet 9 per cent capital adequacy by 2012, under Basel-II norms.

SBI, the country's largest lender, would require around Rs3,000 crore to comply fully with Tier I capital requirements, Chaudhuri told reporters in Chennai today.

Speaking on the sidelines of the Bancon 2011 conference, Chaudhuri said the government has committed to infuse Rs4,000-crore capital into SBI and the options would be discussed and decided by the government.

According to him, even with a Rs3,000-crore infusion, the bank would comfortably reach Tier-I adequacy level of 9 per cent.

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