Indias largest lender,State Bank of India (SBI),on Monday secured the governments nod for its Rs 9,576-crore capital-raising plan through the qualified institutional placement (QIP) route. In a stock exchange notification,the bank notified investors that the fund-raising plan is subject to the condition that the governments shareholding in the bank does not fall below 58%. On December 30,the bank will seek shareholder approval at a general meeting for the QIP issue and to issue preferential shares worth Rs 2,000 crore to the government. We have not decided when we want to tap the market for the QIP. We will assess and see which will be a good window for us, said SBI chairman Arundhati Bhattacharya. Earlier this month,a senior official of the bank had indicated that SBI would like to raise funds before the end of this financial year. The issue is intended to augment the banks capital by increasing its Tier-1 capital ratio under Basel III to over 9% and its overall capital adequacy to 12%,the official had said. As on September 30,SBIs Basel III capital adequacy ratio stood at 11.69% of which Tier I was at 8.73%. SBI shares closed at Rs 1,889.20 per share on the BSE on Monday,up 1.47% from the previous close. According to analysts,the total capital infusion,which amounts to 11.7% of SBIs adjusted net worth,will be book-value accretive. As per Capitaline,the net worth of the largest public lender,excluding revaluation reserves,stood at Rs 98,884 crore as on September 30,2013. SBI reported a 35% y-o-y decline in net profit to Rs 2,375 crore for the quarter ended September 30,2013. During the quarter,the gross non-performing asset ratio at SBI rose to 5.64% from 5.56% in the previous quarter. Apart from SBI,Corporation Bank,Dena Bank and Allahabad Bank are also looking to raise Rs 2,120 crore through QIPs as per recent disclosures on stock exchanges.
