State Bank of India would seek the approval of shareholders for a follow-on public offer or private placement of shares, ADR/GDR to raise up to Rs 20,000 as per a public notice issued on Wednesday.
Earlier, the SBI board had passed an enabling resolution to raise up to Rs 20,000 crore to shore up the bank’s equity capital and now it would seek shareholder approval at a meeting to be held on December 7 in Mumbai.
SBI said that as on June 30, 2018 the bank had capital adequacy ratio (CAR) of 12.83 per cent with CET-I (Common Equity Tier – I) capital at 9.80 percent. To meet the regulatory requirement of total adherence to Basel III CAR by March 2019, and keeping in mind the bank’s growth in assets and plough back of profits, the bank feels it would need additional capital to be raised by March.
“The proceeds of the issue are proposed to be used to meet long term funding requirements of the bank, bank’s growth capital, requirements, to meet the bank’s capital expenditure, making investments/providing loans and advances, enhance its long term resources and thereby strengthening the financial structure of the Bank and its subsidiaries and associates and other general banking purposes,” SBI said.
During a recent conference call, SBI chairman Rajnish Kumar told reporters that the issue would depend on the market conditions, if the environment is good, and there is growth potential. He also said they don’t need the additional capital for risk purposes but for the growth. The bank senses the current market to be opportune for it to grow.