Govt seeks to reduce SBI stake | india | Hindustan Times
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Govt seeks to reduce SBI stake

india Updated: Mar 08, 2010 21:20 IST
HT Correspondent

Finance minister Pranab Mukherjee on Monday introduced a Bill to amend the State Bank of India Act, 1955 that seeks to bring the government’s holding in the country’s largest public sector bank on a par with other public sector banks at 51 per cent.

At present, the Centre holds a 59 per cent stake in SBI. Under the existing SBI Act, the stake of the promoter, that is the Government of India, cannot fall below 55 per cent

The amendment is expected to pave way for the bank to expand its capital base, either through a follow-on public offer or a rights issue or other financial instrument

The bill's statement of objects and reasons said the legislation was aimed at allowing “reduction of shareholding of the Central government from 55 per cent to 51 per cent consisting of the equity shares of the issued capital.”

“The amendment bill seeks to provide for enhancement of the capital of State Bank by issue of preference shares, to enable it to raise resources from the market by public issue or preferential allotment or private placement,” it said.

“The bill also aims to provide for flexibility in the management of the bank," it added.

It will provide for increasing the authorised capital of the SBI to Rs 5,000 crore and enable the Central government to increase or reduce the authorised capital in consultation with the Reserve Bank of India.