Pune: State Bank of India will hold discussion with the Finance Ministry next week on the much-delayed rights issues plan of the bank, its Chairman Pratip Chaudhuri said on Saturday.
"We will have a consultation with the Finance Ministry officials next week on the rights issue because they have to give their share in the rights issue," Chaudhuri told reporters on the sidelines of the two-day annual banking summit Bancon 2012 here on Saturday.
The chairman, however, did not detail the size of the issue. Last year, it was planning to launch an over Rs 20,000 crore issue.
State Bank has been waiting for a go-ahead from the government, which owns 58.7 percent in the bank, for an over Rs 20,000 crore rights issue since the middle of FY11. The process was started during the term of the past chairman O P Bhatt.
The government has been delaying the rights issue as its own finances have been constrained for too long now as fiscal deficit had hit a 5.8 percent of GDP last fiscal.
While denying permission to launch a rights issue last year, the government had infused over Rs 7,800 crore into the bank.
Last week, the Finance Ministry had said that it may allow its banks to raise funds through qualified institutional placement.
Banks need capital to maintain their solvency ratio apart from driving business and SBI's core capital has been dipping driven down by rising bad loans and the resultant provisions.
At the end of the September quarter, SBI had capital adequacy ratio of 12.63 percent with tier-I capital at 8.97 percent. The RBI mandated requirement is 8 percent.
"If we include the profits, the tier-I capital will go above 10 percent by the end of this fiscal and above 11 percent if the government infuses some funds," Chaudhuri had said on the earnings day.
Despite reporting a robust 30 percent rise in net profit to Rs 3,658 crore in the September quarter as it set aside lower amount for provisions, though its bad assets soared to 5.15 percent of its gross advances and 2.44 percent to net advances.
In absolute terms, the gross non-performing assets rose to Rs 49,202.46 crore, while net NPA rose to Rs 22,614 crore. The net NPA addition stood at Rs 13,200 crore against Rs 11,400 crore a year ago.
But the bank made 37 percent less provisions for NAPs at Rs 1,837 crore compared to Rs 2,921 crore reported in the same period last fiscal, as the bank has made higher provisions in the previous quarter.


Latest News from Business News Desk