India’s government will invest 40 billion rupees ($814 million) of capital in State Bank of India (SBIN) by March-end, Chairman Pratip Chaudhuri said.
The country’s biggest bank will need around 400 billion rupees in fresh capital over the next three years, Chaudhuri told reporters in Chennai today. State Bank also aims to raise the capital from its shareholders and own funds, he said.
Mumbai-based State Bank has been in talks with the government to raise capital since at least February 2010. Moody’s Investors Service cut State Bank’s financial strength rating on Oct. 4, citing deteriorating asset quality.
State Bank gained 1.6 percent to 1,966.15 rupees at close of trading in Mumbai yesterday. The stock has declined 30 percent this year as the fastest pace of interest rate increases among major economies and an economic slowdown trigger concerns that bad debts may mount.
India plans to invest 140 billion rupees in state-owned banks, a finance ministry official said in New Delhi on Nov. 1, declining to be identified citing government policy. The money is in addition to a 60 billion-rupee investment planned for the year to March 31 and will ensure the banks have a Tier 1 capital ratio of more than 8 percent, the official said.
To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
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