By IANS
Mumbai : India’s largest government-owned bank, the State Bank of India (SBI), will garner Rs.167.36 billion ($4.28 billion) from its long-awaited rights issue to the government of India, eligible existing shareholders and global depository receipt (GDR) holders, the bank announced here Monday.
The rights issue will be priced at Rs.1,590 per share, at a discount of around 35 percent on its current share price, said a statement released by the bank.
By the rights issue, SBI would be able to raise capital without diluting the government stake in the bank.
According to a decision of the SBI central board here Monday, existing eligible shareholders would be entitled to one share for every five shares held.
While the issue date has not been announced, the decision comes six weeks after the union cabinet of ministers gave its green signal to the rights issue.
SBI will raise its issued capital at Rs.6.5 billion from the existing base of Rs.5.26 billion.
The issue will be offered to existing SBI GDR holders and its employees under the Employees Stock Purchase Scheme.
The central government will invest around Rs.100 billion by way of bonds in the rights issue to maintain its 59 percent stake in SBI.
The bonds would be redeemable through the proposed Securities Redemption Fund, which would be funded through taxes and dividends received from SBI.
The largest state-owned bank in India, SBI is ranked at 70 globally in terms of market capitalisation.