India’s government is seeking approval from parliament to reduce its stake in the State Bank of India to 51 percent and allow the nation’s biggest lender to boost capital by selling shares.
The amendment to the State Bank of India Act, first proposed in December 2006, was introduced in the lower house of parliament today. State Bank shares rose as much as 3.3 percent in Mumbai to the highest intraday-trading level since Feb. 1.
The changed rules would allow the Mumbai-based lender, which is 59.4 percent owned by the government, to sell preference or bonus shares, hold a rights offer or make private placements, according to the proposed legislation. State Bank of India plans to raise 400 billion rupees ($8.8 billion) over the next five years, Chairman Om Prakash Bhatt said last month.
Under the proposed changes, which also need to be approved by the upper house of parliament, State Bank would be allowed to boost its authorized capital to 50 billion rupees, and the government would be authorized to appoint as many as four managing directors.
India’s government is required to hold at least 55 percent of State Bank under current rules.
--Editors: Chitra Somayaji, Joost Akkermans
To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Sumit Sharma at sumitsharma@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net;
http://www.businessweek.com/news/2010-03-08/india-seeks-law-change-for-s...
