Govt approves Rs7,900 crore capital infusion in SBI

 The capital infusion will “increase the issued capital by SBI by way of preferential allotment of equity shares to the government to the extent of approximately Rs7,900 crore including premium,” SBI said in a filing with the BSE

Mumbai: State Bank of India (SBI), the country’s largest lender, on Monday said the government has approved capital infusion of Rs7,900 crore in the bank, a development that will help the lender to increase its business activities, reports PTI.

The capital infusion will “increase the issued capital by SBI by way of preferential allotment of equity shares to the government to the extent of approximately Rs7,900 crore including premium,” SBI said in a filing with the BSE.

The government of India conveyed its approval today, it said.

With the capital infusion, the government’s stake would go up to about 65%. At present, the government of India holds 59.4% stake in SBI.

The capital infusion by the government will raise Tier I capital of the bank to about 8%.

As of September 2011, the capital adequacy ratio (CAR) of SBI stood at 11.4%. Of this, Tier-I capital stood at 7.47% at the end of second quarter against the minimum 8% level desired by the government.

It is to be noted that earlier this month, SBI chairman Pratip Chaudhuri had said the government has approved a capital infusion of Rs6,000-Rs8,000 crore in the bank by 31st March.

Last year, SBI had submitted a proposal to the government for raising Rs20,000 crore through a rights issue to fund its growth plans over the next two fiscals.

SBI had raised over Rs16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution was in the form of bonds to the bank instead of cash.

In 2010-11, the government provided capital support to the tune of Rs20,157 crore to public sector banks.

Most of the public sector banks got capital support from the government last fiscal. These banks included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

It is to be noted that financial services secretary DK Mittal had said the state-run banks would require about Rs3.5 lakh crore by 2021.

A committee headed by finance secretary RS Gujral is working out a strategy for the required capital infusion in public sector banks over a period of next 10 years.



A short downtrend has begun: Monday Closing Report

Nifty may move in the range of 4,935 and 5,125

Weak global cues and poor quarterly results from domestic companies resulted in the market snapping its three-day winning streak. The Sensex and the Nifty saw their steepest one-day fall of 2.15% and 2.26% since 16 December 2011 and 8 December 2011, respectively. The fall on the National Stock Exchange (NSE) was on a high volume of 75.59 crore shares. We had mentioned in our Friday’s closing report that the Nifty would move in the range of 5,090 and 5,250, however, it breached the lower range and closed below it. If the Nifty breaks today’s low of 5,077, we may see it moving in the range of 4,935 and 5,125 with a downward bias.   

Snapping its three-day winning streak, the domestic market opened lower tracking the Asian bourses which were mostly lower on unending Eurozone debt concerns. Fitch Ratings on Friday downgraded the sovereign credit ratings of Italy, Spain Belgium, Cyprus and Slovenia, indicating there is a one-in-two chance of further downgrades in the next two years. The inability of Greece and its private creditors to come to a consensus on debt swap talks also weighed on the investors.

The Nifty opened at 5,164, down 41 points from its previous close, and the Sensex resumed trade with a cut of 96 points at 17,138. The Nifty touched an intraday high of 5,166 in early trade while the opening figure was the high on the Sensex was its high.

Dismal quarterly performance of blue-chips like NTPC and BHEL resulted in a sell-off in the capital goods and power sectors. Banking stocks were also under pressure in trade today.

The market drifted lower in noon trade on a lower opening of the European markets ahead of a meeting of European leaders to chalk out a plan to resolve the debt crisis.

The benchmarks fell to their intraday lows towards the close of trade wherein the Nifty dropped to 5,077 and the Sensex went back to 16,828. The market closed marginally higher, but with a loss of over 2%. The Nifty settled 117 points down at 5,087 while the Sensex tumbled 371 points to 16,863.

The advance-decline ratio on the NSE was negative at 546:1237.

While the broader indices also ended lower, they outperformed the Sensex. The BSE Mid-cap index closed 1.96% lower and the BSE Small-cap index declined 1.82%.

Today’s rout saw all sectoral indices settling in the red. The losers were led by BSE Capital Goods (down 5.55%); BSE Power (down 3.54%); BSE Realty (down 3.10%); BSE Metal (down 2.85%) and BSE Bankex (down 2.78%).

Sun Pharma (up 1.34%); Bajaj Auto (up 0.48%); Jindal Steel (up 0.41%); Hero MotoCorp (up 0.13%) and TCS (up 0.06%) managed to settle higher on the Sensex. The top losers were BHEL (down 10.41%); Sterlite Industries (down 5.99%); Larsen & Toubro (down 5.37%); Hindalco Industries (down 4.81%) and Mahindra & Mahindra (down 4.71%).

The Nifty gainers were led by Sun Pharma (up 1.48%); Ranbaxy Laboratories (up 1.18%); Bajaj Auto (up 0.80%); Jindal Steel (up 0.70%) and Grasim (up 0.40%). The top laggards were BHEL (down 11.33%); Sterlite Ind (down 7%); Sesa Goa (down 6.96%); JP Associates (down 6.57%) and L&T (down 5.75%).

Markets in Asia closed mostly lower on fresh concerns about Europe. The failure of the Greek government and its private creditors to sew an agreement and cautiousness ahead of a crucial European leaders’ summit weighed on the markets.

The Shanghai Composite declined 1.47%; the Hang Seng dropped 1.66%; the Jakarta Composite tumbled 1.79%; the KLSE Composite fell by 0.48%; the Nikkei 225 lost 0.54%; the Straits Times declined 0.96% and the Seoul Composite settled 1.24% lower. Bucking the trend, the Taiwan Weighted jumped 2.40%.

Back home, foreign institutional investors were net buyers of stocks totalling Rs1,240.16 crore on Friday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs708.46 crore.

Infrastructure major IVRCL today said it has bagged a Rs1,300 crore project from the National Highways Authority of India (NHAI) for widening the Raipur-Bilaspur road stretch in Chhattisgarh. The project is to be executed as a BOT (Toll) project on a design, build, finance, operate and transfer pattern under NHDP-IV, the company said. The stock tumbled 7.68% to Rs45.70 on the NSE.

Bhushan Steel today said it plans to raise up to Rs700 crore by April through a rights issue to part-finance its ongoing expansion projects. The money will be utilised to part-finance the company’s expansion activities, particularly in Odisha, where it is setting up a 3 million tonnes per annum plant. The stock declined 2.93% to close at Rs339.50 on the NSE.

Electrical equipment maker Havell’s India has reported a 41.27% jump in its consolidated net profit for the quarter ended 31 December 2011 at Rs89 crore, up from Rs63 crore in the year-ago period, boosted by healthy performance across all segments of its business.

During the quarter, consolidated net revenue grew 16.41% to Rs1,660 crore from Rs1,426 crore in the year-ago period. The stock gained 3.58% to close at Rs444.30 crore on the NSE.


DoT may not allow spectrum sharing by 3G operators

Spectrum sharing was expected to be part of the National Telecom Policy-2011 and the operators were looking forward to it, but the government’s decision not to allow this may impact their business plans

New Delhi: After their third generation (3G) roaming agreements being termed as ‘illegal’ by the Department of Telecom (DoT), telecom firms may be in for another shock now with the government deciding against allowing spectrum sharing in this segment, reports PTI.

Spectrum sharing was expected to be part of the National Telecom Policy-2011 and the operators were looking forward to it, but the government’s decision not to allow this may impact their business plans, sources in the know said.

Although no specific reason was given for not allowing sharing of spectrum, sources said this may be allowed in case of two operators having similar frequency bands.

“Spectrum sharing will not be permitted among licencees having 3G spectrum (in the same circle),” according to the sources.

The Department of Telecom (DoT) has already termed the 3G roaming agreements among various operators as ‘illegal’.

The Telecom Dispute Settlement and Appellate Tribunal (TDSAT) is already hearing the dispute on this.

Private operators—Bharti Airtel, Vodafone Essar, Idea Cellular, Aircel and Tata Teleservices—have also filed a caveat in both the Supreme Court as well as the high court apprehending that the government may appeal against the TDSAT order which dismissed DoT's plea that the telecom tribunal has no jurisdiction over the intra-circle 3G roaming pacts.

Earlier, the telecom tribunal TDSAT had dismissed the government’s plea challenging its jurisdiction to decide on 3G roaming dispute, but directed operators to submit copies of their agreements to DoT.

The tribunal also directed five operators to hand over copies of their 3G roaming agreements to the DoT. It also said that DoT, as per its earlier statement, would maintain confidentiality of the agreements.

DoT had questioned the jurisdiction of TDSAT saying that the tribunal has no power to look into the licence terms and conditions entered among the operators and the DoT.

The TDSAT had also given a lifeline to private telecom operators by extending its interim order that restrained DoT from taking any coercive action against them.

Last year, passing an order on 24th December, the tribunal had directed the DoT not to take any coercive action against telecom operators.

A day prior to that the government had asked the five telecom operators to stop their inter-circle roaming on 3G bandwidth within 24 hours and it was challenged by Airtel, Vodafone, Idea, Aircel and Tata Tele before TDSAT.


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