State Bank India (SBI) today said its rights issue proposal is on course and it could happen in another 2-3 months.
"It will happen soon...Another 2-3 months," SBI Chairman Pratip Chaudhuri said on the sidelines of 'Conference on Public Private Partnership (PPP) in National Highways: Challenges & Opportunities' here.
"We are in the final stages of discussion (with the government)...Amount is not finalised yet, but rights issue is very much on course," he said.
The country's largest bank submitted proposal a a couple of months of ago to raise Rs 20,000 crore through a rights issue.
SBI requires Rs 20,000 crore to fund its growth plans over the next two fiscals.
The government has a 59.4% stake in the bank. In case a rights issue is approved and the government would need to subscribe 59.4% of the total rights being issued to maintain its holding at the current level.
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It is to be noted that the government has already announced that it is committed to providing adequate capital to all PSU banks so as to maintain their tier-I capital at 8% and the government's stake over 58%.
As of June, 2011, the capital adequacy ratio (CAR) of SBI stood at 11.6%. Of this, tier-I capital stood at 7.6% at the end of first quarter, against the minimum 8% level desired by the government.
SBI had raised over Rs 16,000 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.
Asked if RBI could further tighten money supply in its mid-quarterly review this week, Chaudhuri said "there could be (interest rate hike) because inflation is still not under control".
It is for RBI to decide about the quantum of the rate hike, he said.
RBI has raised rates 11 times since March, 2010 to tame inflation. Food inflation for the week ended August 27 stood at 9.55%.