The largest lender of the country, State Bank of India expects funds to be pumped into it by the government by March 2012. The bank said that it has been assured by the Finance Ministry of adequate capital being pumped in though the path for infusion is yet to be decided.
Chairman of the bank, Mr Pratip Chaudhuri quoted, "Whether it would be a rights issue, preferential or QIP route... It is still not decided."
"But one thing has been confirmed through the finance secretary that the bank would be adequately capitalised by 2012," said Chaudhuri.
"Our tier-I capital had dropped to 7.6% against desired requirement of 8%... We need to grow and in doing that we need to increase our tier-I and the government of India is convinced," he said stating the need for capital infusion.
Speaking about government's shareholding in SBI, he said, "Our issue is that the government has to take a call what level of ownership it wants to maintain in the bank. If it wants to have 59.4% stake in SBI, then it would be a rights issue."
"If it [the stake] is to be raised from the level of 59.4%, then it would be a preferential issue and if it has to be lowered, then it has to be through a QIP issue."