The country’s largest bank, State Bank of India (SBI) has announced that bank’s board has decided to raise money with the Country's largest ever rights issue by the end of the current financial year in March 2008.

The board has approved a 1:5 rights issue at a 35.42% discount to its closing price on the Bombay Stock Exchange (BSE) on Monday. The rights share with a face value of Rs 10 each will be offered at a premium of Rs 1,580, an official release said.

On Monday, shares of SBI closed at Rs 2,462 up by 1% over previous close of Rs 2,437.

SBI will raise Rs 16,736.31 crore through the rights issue, which will be the largest public offering in India. The board has also decided to increase the issued capital of the bank from Rs 526.30 crore to Rs 650 crore.

The public sector bank has fixed February 4, 2008 as the record date for the issue, which means that those who buy SBI shares on or before February 4 will be entitled to the rights issue. After that date, the rights share will not be given to fresh buyers, but it will go in the account of the person in whose name the share is registered on February 4.

The bank has also decided to issue shares to its 200,000 employees under an employees stock purchase scheme, the first by a public sector bank.

Last year, ICICI Bank had raised nearly $5 billion through a follow-on offering in both domestic and international markets.

DSP Merrill Lynch, Kotak Mahindra Capital, Deutsche Bank, Citibank and CLSA Securities have been appointed merchant bankers to the issue.