Finally,SBI to get Rs 6-8K crore capital infusion before March 31

State Bank of India,Indias largest commercial bank,has received the Finance Ministry approval for a capital infusion of Rs 6,000-8,000 crore through a preferential issue of shares by March 31,2012

State Bank of India,Indias largest commercial bank,has received the Finance Ministry approval for a capital infusion of Rs 6,000-8,000 crore through a preferential issue of shares by March 31,2012.

The Finance Ministry has approved long back. Even the Planning Commission approval is in place. So it capital infusion should be between Rs 6,000 crore and Rs 8,000 crore. It should be done before March 31, SBI Chairman Pratip Chaudhuri said. The government has already announced that it is committed to providing adequate capital to public sector banks so as to maintain their Tier-I capital at 8 per cent.

As of September 2011,the capital adequacy ratio CAR of SBI stood at 11.4 per cent. Of this,tier-I capital stood at 7.47 per cent at the end of second quarter against the minimum 8 per cent level desired by the government.

The government of India,which holds a 59.4 per cent stake in SBI,has earmarked the infusion amount to ensure the bank meets regulatory requirements.

In 2010-11,the government provided capital support to the tune of Rs 20,157 crore to public sector banks.

SBI had submitted a proposal some months ago to raise Rs 20,000 crore through a rights issue. The bank requires Rs 20,000 crore to fund its growth plans over the next two fiscals.

SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue,the government contribution was in the form of bonds to the bank instead of cash.

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Banks would need up to Rs 2,70,000 crore in fresh capital in order to meet the Basel III guidelines by the deadline set by the Reserve Bank of India,says a research report by Crisil.

The banks will need to raise equity capital of Rs 1.4 lakh crore till March 2017 to meet their growth requirements,while complying with the guidelines. This requirement can turn out to be higher by another Rs 1.3 lakh crore in case the investor appetite is low for non-equity tier-I capital instruments, Crisil Ratings director Pawan Agrawal said in a report here last week.