State Bank of India, (SBI) country’s largest public sector lender is likely to get around Rs 6,000 crore from the government as part of a equity infusion plan. The Ministry of Finance, Government of India (GOI) has decided to infuse Rs 16,000-17,000 crore under equity infusion plan, in public sector banks during the current financial year.
This infusion will bolster the equity base of SBI along with at least half-a-dozen other public sector banks. The move is of particular interest to SBI, as it has seen its credit rating downgraded by Moody's to D+ on the grounds that the bank's capital situation will come under pressure due to rising bad debt. At the end of September, SBI's Tier-I capital adequacy ratio was at 7.47%, lower than the government's comfort level but well above RBI-mandated 6%.
The bank has decided to make preferential allotment of shares to the government, which will result in not only the paid-up capital rising but even the centre's shareholding going up to at least 58% in all bank.
