“Although the government has not officially said anything on the rights issue proposal yet, capital infusion of Rs5,000 crore would take our Tier I (equity) capital over 8% by the end of the current fiscal,” SBI managing director and chief finance officer Diwakar Gupta informed the media
New Delhi: State Bank of India (SBI), the country’s largest lender, today said that raising Rs5,000 crore through the rights issue, in the first phase by March would be sufficient to help it achieve 8% capital adequacy, reports PTI.
“Although the government has not officially said anything on the rights issue proposal yet, capital infusion of Rs5,000 crore would take our Tier I (equity) capital over 8% by the end of the current fiscal,” SBI managing director and chief finance officer Diwakar Gupta told PTI.
“The rights issue could be 60:40 ratio,” he said, adding that the government could give Rs3,000 crore and remaining Rs2,000 crore could come from retail investors. With 59% equity, the government is the largest shareholder in SBI.
Mr Gupta said the first tranche of Rs5,000 crore for capital raising exercise could be adequate for meeting norms, although SBI requires Rs20,000 crore in 2-3 years.
SBI had given a proposal for Rs20,000 crore rights issue a few months ago and it is being examined by the government
With the deterioration in its asset quality, and Tier I capital coming down below 8%, global ratings agency Moody’s downgraded the creditworthiness of SBI by a notch to ‘D+’ last week.
Tier I capital of the bank declined to 7.6% at the end of first quarter, against the minimum 8% level desired by the government. Overall capital adequacy ratio (CAR) (both Tier I and Tier II) of SBI stood at 11.6% as of June 2011.
At the same time, SBI’s non-performing assets (NPAs) reached three-year high of 3.52% of loans for the quarter ended 30th June.
It is government’s stated intent that it is committed to providing adequate capital to all public sector banks so as to maintain their Tier-I capital at 8%, and its stake at over 58%.
SBI had raised over Rs16,000 crore through a rights issue in 2008. The government’s contribution was in the form of bonds to the bank instead of cash.
The bank has submitted a response to the government on the rating downgrade, and already started implementing measures to improve the bank’s efficiency.
On stressed assets, SBI chairman Pratip Chaudhuri had said the bank is taking appropriate steps to bring down its net NPA, which was 1.63% at the end of March.
“We propose to take various measures including we have put a deputy managing director in-charge of the stressed asset management and we are giving very focused attention,” he had said.
The bank intends to bring down its net NPA to 1.5% by the end of the current fiscal.
Tata Mutual Fund new issue closes 18th October
Tata Mutual Fund has launched Tata Fixed Maturity Plan Series 37 Scheme B, a close-ended income scheme.
The investment objective of the scheme is to generate income and / or capital appreciation by investing in wide range of Debt and Money Market instruments having maturity in line with the maturity of the scheme. The maturity of all investments shall be equal to or less than the maturity of the scheme. The tenure of the scheme is 369 days.
The new issue closes on 18 October 2011. The minimum investment amount is Rs10,000.
Crisil Short Term Bond Fund Index is the benchmark index. Murthy Nagarajan is the fund manager.
Of the total 24 lakh subscribers of NPS, only around 45,000 are from the informal sector. NPS is a government-run retirement scheme for individuals, including those in the unorganised sector
The government is looking at ways to popularise the new pension system (NPS) by strengthening the distribution base to reach out to the informal sector, a finance ministry official said today.
Of the total 24 lakh subscribers of NPS, only around 45,000 are from the informal sector. NPS is a government-run retirement scheme for individuals, including those in the unorganised sector.
"We are aiming at increasing the subscriber base by way of strengthening Points-of-Presence (PoPs), which will enable us to reach out to people," the official said. PoPs are the first points of interaction with NPS subscribers. Authorised branches act as collection points and extend customer services.
There are about 30 PoPs in the country at present. The official said the ministry is looking at ways to reduce expenditure and reach out to people to increase participation.
"We need to increase awareness among people about NPS. We are trying to find ways to reduce distribution expenses and involving state agencies to reach out to the informal sector.
Of the total NPS subscribers, over 7.92 lakh are central government employees, 9,042 are from private companies, 41,826 are employees from central autonomous bodies. About 7.84 lakh subscribers are from state governments.
Earlier this year, a committee set up by the Pension Fund Regulatory and Development Authority (PFRDA) had suggested substantial lowering of the cost of buying NPS, besides providing incentives to distributor, which could help in increase in sales the scheme.
The report also recommended bringing down the minimum annual subscription of Rs6,000 for the main NPS to Rs1,000 per year so as to ease the entry barrier for investors. It would also help attract lower-end customers towards NPS.
NPS, launched for all citizens in May 2009, failed to take-off due to lack of sales ''push''. So far it has attracted only 50,000 individual buyers, out of the over 400 million workforce in the country.