SBI to raise up to $4.3 billion in rights issue

State Bank of India (SBI), India's largest lender, plans to raise up to $4.3 billion through a rights equity issue in 2010-11, about half the amount it needs to sustain growth over the next five years, its chairman said. OP Bhatt said on Wednesday the bank would need to raise Rs 400 billion ($8.6 billion) to Rs 500 billion to feed demand for loans over five years in the fast-growing economy.

The Rs 100 billion to Rs 200 billion rights offering will need the support of the government, which owns about 60% of the bank. Its rights issue can be successful only if government subscribes to it. The bank will start working with the government after the national budget on Friday that is expected to provide clarity on capitalisation plan for state-run banks.