SBI planning a rights issue

sbi-logoIndia's largest lender State Bank of India has announced that it has intentions to come up with a rights issue in order to raise USD 4.3 billion in the current financial year. SBI's chairman OP Bhatt on Wednesday said that it would need half the amount of the amount raised to sustain growth for the coming 5 years.

About 8.6 billion US dollars or Rs. 400-500 billion is what the bank needs to raise to fulfill the demands of the growing demand of the fast developing India in terms of loans.

The banking major is thus looking to raise half the amount in the coming 12-18 months and it would be a wonderful achievement for this bank if they are able to meet this goal, though it's a tough challenge. Government still owns a majority 60% stake in the company and the Chairman believes that the bank will need a minimum of Rs. 100-200 billion support of the government.

The rights issue will not be a successful one if the government does not plan to support it. Their shares have a market value of 26.3 billion US dollars and have dipped 15.5 % so far this year as compared to 76.2% jump last year.