State Bank of India (SBI), the country’s largest lender, initiated a qualified placement issue (QIP) aiming to raise ₹11,000 crore to support growth and to meet regulatory requirements.
In a notification to the stock exchanges, the bank said it has opened ‘qualified institutional placement’ of equity shares of face value of ₹1 to qualified institutional buyers.
“The floor price in respect of the issue, based on the pricing formula of SEBI, is ₹287.58 per equity share of the bank and the relevant date for this purpose... is June 5, 2017,” it said. The bank may offer a discount of up to 5% on the floor price.
SBI shares ended almost flat at 287.35 on Monday on the BSE. The fund raising is a part of SBI’s overall plan to raise ₹15,000 crore from the markets for which it has received its board approval in March. The fund raising will dilute the government’s stake in the bank which was 62.22% as of March.
Indian banks will need capital not only to support their growth plans but also for complying with Basel-III norms. SBI’s capital adequacy ratio, at 13.11%, which includes 10.35% of tier-I capital, is higher than the regulatory requirement of 9%. It has received ₹5,681 crore of capital from the government in FY17.
Apart from SBI, many other public sector lenders like Bank of Baroda, IDBI Bank, Oriental Bank of Commerce, and Union Bank of India - among others, are planning to raise funds through QIP.
