Govt okays SBI rights offer to staff at Rs 1,590

State Bank of India has received government approval to allot shares to its staff under employees stock purchase scheme at Rs 1,590 a share, or the price of the bank's rights issue offer.

The employees stock purchase scheme is most likely to open in the last week of March and continue for 14 days, a senior official said on Monday.

"The issue may close in the next financial year. There are some logistics problem," the official said. The country's largest bank would first want to complete its Rs 16,700 crore rights issue and then allot shares to staff under employees stock purchase scheme.

The rights issue opens February 18 and closes March 18. SBI will be the first state-run bank in India to offer shares under employee stock purchase scheme.

The official, however, declined to comment on the impact on SBI's profit following the huge discount at which the bank will offer shares to employees. Given current market price of Rs 2,040, SBI's employees stock purchase scheme is at 28 per cent discount.

Government had given its permission for the proposed employee stock purchase scheme on January 14 at the bank's board meeting, but the pricing was not yet decided then.

SBI has over 200,000 employees in over 9,500 branches in India and 84 offices abroad in 32 countries. SBI board had also passed a resolution to increase the issued capital of the bank to Rs 650 crore (face value of Rs 10 per share) from Rs 526 crore that means the number of equity shares will go up to 650 million.

Following the rights issue, the share capital will go up to 632 million shares. Out of the remaining 18 million shares, there will be some amount reserved as cushion for future equity issue and some for employee stock purchase scheme.