SBI Asks for 250 Billion, But May Get Only 150 Billion via Rights Issue

State bank of India (SBI), India's largest lender, reportedly required about INR250 billion as capital infusion from the GoI (Government of India). However, the government decided to fullfill such requirements partially and voiced plans of infusing $3.3 billion or INR150 billion into the bank. The fund infusion would be made in the next fiscal year by way of a rights issue.

According to the experts at Unicon and other brokerage companies, the reasons behind SBI's high fund requirements are mainly the intention of expanding their presence and operations, and for maintaining a healthy capital adequacy ratio. However, the bank's intention of carrying out acquisition activities can also be another reason behind it.

SBI, which posted about 14% rise in net profit for quarter ended December, fears the dampening of its earnings growth due to the increasing interest rates.

The government had also expressed intentions of infusing another INR88 billion into various other state-run banks to help then in meeting their capital adequacy ratios.