Government approves SBI capital infusion: SBI

17 Jan 2012

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The largest lender in the country, State Bank of India (SBI), yesterday said the government had approved capital infusion of Rs6,000-8,000 crore into the bank by 31March.
 
''The finance ministry had approved (the plan) long back. Even the Planning Commission's approval is in place. It (capital infusion) should be between Rs 6,000 crore and Rs 8,000 crore be done before March 31,'' chairman Pratip Chaudhuri told reporters in New Delhi.

The government had already announced its commitment to providing the required capital to public sector banks to maintain their Tier-I capital at 8 per cent. As of September, SBI's capital adequacy ratio stood at 11.4 per cent, of which Tier-I capital stood at 7.47 per cent at the end of the second quarter, against the minimum 8 per cent desired by the government.

The government, with a 59.4-per cent stake in the bank, has made provisions for the infusion amount to ensure the bank met regulatory requirements.

In a proposal it submitted a few months back, the bank sought Rs20,000 crore through a rights issue. The amount would go to fund growth plans over the next two financial years. It had raised Rs16,000 crore through a rights issue in 2008. In the last rights issue, the government's contribution came in the form of bonds.

According to Chaudhuri chances of the Reserve Bank of India going for a rate cut in the immediate future were rather slim.

''I am not very hopeful,'' Chaudhuri said, replying to a question about the  possibility of an interest rate cut by the apex bank in view of the moderation in headline inflation to a two-year low of 7.47 per cent in December.

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