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Friday, December 08, 2006

SBI may float follow-on equity public issue next fiscal

State Bank of India, SBI may come out with a follow-on public issue of shares in 2007-08 (Apr-Mar), chairman O P Bhatt said, reports CMW.

"The Reserve Bank of India, RBI is currently holding 59.7% in the bank, and norms provide that it cannot fall below 55%. Going by that, we can get so much more capital (by diluting upto 4%) from the market. We are looking at public float next year," Bhatt told reporters on the sidelines of a conference on globalisation.

Bhatt also said the bank will raise Rs 20 billion via Tier-II capital by March.

The central bank had proposed to transfer its 59.7% stake in State Bank to the government, as per the recommendations of Narasimhan Committee report on banking sector reforms. The Narasimhan Committee had suggested that a regulator should not be the owner of a bank. The stake transfer, likely to take place in June, is expected to be cash neutral.

Parliament is also scheduled to discuss an amendment to the SBI Act, which will enable reduction in the central bank's stake in SBI to 51%. Besides reducing the floor on RBI holding in India's largest commercial bank, the amendments will allow State Bank to issue preference shares, split ordinary stock, issue bonus shares as well as increase its authorised share capital.

The amendments may be taken up in the current session of parliament that ends on December 19.

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