The Hindu Business Line : SBI rights issue: Govt subscription against marketable securities

Mumbai, Feb. 16 The Government of India’s subscription to the rights issue of State Bank of India will be against the issue of ‘Special Marketable government securities’ and not SLR (Statutory Liquidity Ratio) Marketable Securities.

The SBI said it will issue a corrigendum to its Letter of Offer for the rights issue, intimating its shareholders of the change.

The bank has also informed SEBI of the matter, it said in a notice to the stock exchanges.

The matter of SLR bonds was revisited by the Government in the light of suggestions received by it from the Reserve Bank of India, said a statement from SBI to the stock exchanges.

Repo options

An SBI official said the bank would have preferred SLR securities.

It would have been easy for SBI to market it to banks for their SLR portfolio; in addition these would have been repo-able with RBI. In the case of special marketable securities, buyers would bite because the yields will be a little higher, but they can be repo-ed only under Collateralised Borrowing and Lending Obligations and not with RBI. A senior official with another public sector bank said that giving SLR status to the Government bonds for the SBI rights issue would have created more such demands from other banks. “Other public sector banks that wish to make their rights issue would also have asked for the same facility,” he said.

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SBI rights issue: Govt subscription against marketable securities