INDIA FOR STAKE CUT IN SBI
The government on Monday moved a bill seeking parliament's nod to reduce its equity in the State Bank of India (SBI) to 51 percent by allowing the country's largest lending institution to raise money from the market.
The government currently holds 59.41-percent stake in the commercial bank and already has parliament's approval to bring down its stake to 55 per cent.
The latest move will help the state-run bank raise more money through bonus, rights or preference share issue. At the current market capitalisation of the bank, 8.41 percent stake works out to over $2.2 billion.
The new bill, moved in the Lok Sabha, by Finance Minister Pranab Mukherjee, also seeks permission to increase the bank's authorized capital Rs.50 billion (Rs.5,000 crore/$1 billion).
"The amendment bill seeks to provide for enhancement of the capital of State Bank by issue of preference shares to enable it to raise resources from the market by public issue, preferential allotment or private placement," said the bill.
"While the State Bank can access capital markets by issuing equity shares, bonds or both equity shares and bonds, there is no express provision under the act to enable the bank to issue preference shares and also bonus shares."
Even after the fresh equity issue, the majority control will stay with the government.
The shares of the commercial bank were up 3.3 percent and touched the monthly high of Rs.2,114.00 after the finance minister tabled the bill in parliament. They were later ruling slightly lower at Rs.2,074.15 with a gain of 1.35 percent.
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