Union Cabinet approves enhancement of capital requirement of SBINovember 30th, 2007 - 2:57 pm ICT by admin
New Delhi, Nov 30 (ANI): The Union Cabinet today gave its approval for enhancing the capital of State Bank of India (SBI) by subscribing to bank’s rights issue of equity shares against marketable SLR (statutory liquidity ratio) bonds worth Rs 10,000 crore (Rs. 100 billion).
The actual number of shares to be subscribed, coupon rate and tenure of the securities will be worked out later, an official release said.
It will enable the Government to receive around Rs. 1358 crore (Rs. 13.58 billion) by way of dividend and taxes from the bank during the years 2008-09, as against an expenditure of around Rs. 790 crore (Rs 7.9 billion) as interest to be paid to the bank for proposed securities.
The additional growth of the bank due to its increased capital base will also have multiplier effect on the overall performance of the bank, which will gain in terms of its position in the industry, ratings - both in international as well as domestic markets, and increased valuation of its stock, besides boost to the economy at large, the release said.
The transaction will be completed within the current financial year and a Securities Redemption Fund will be created thereafter, it added. (ANI)
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