A bill enabling the State Bank of India (SBI) to split its shares and issue bonus shares may be placed in the current winter session of Parliament. Besides, the amendments to the State Bank of India Act, 1955, envisage the preferential or private placement of shares. The SBI (Amendment) Bill also proposes to allow India’s No. 1 bank to bring down the government holding to 51 per cent, which is on a par with other nationalised banks.
According to the current rules, the holding of the promoter, that is the government, cannot fall below 55 per cent. The government currently has a 59.73 per cent stake.
Other provisions include raising the authorised share capital to Rs 5,000 crore from Rs 1,000 crore and the number of managing directors to four from two.
The finance ministry says the bank will need Rs 1,93,172 crore by 2013 for expansion and supporting its subsidiaries. The government estimates that the bank may raise over Rs 25,000 crore through preference shares to maintain a capital adequacy ratio of over 12 per cent by 2013.
Follow-on offers will be possible if the amendment is passed, while the share split will increase the number of SBI stocks in the market and reduce their prices.