The Hindu Business Line : State Bank of Mysore may enter market by fiscal-end

Money plans
The proposed IPO could be through either rights issue or an IPO or both combined.
Should be able to bring in Rs 12,000-crore additional assets, if it had to reach the 12 per cent capital adequacy rate by 2009.

Coimbatore , June 15

State Bank of Mysore, looking for enhancing its capital base to achieve the Basel-II norm and the benchmark 12 per cent capital adequacy ratio over next two years, is planning to tap the capital market with a public issue that may happen either before the end of current financial year or early next, according to Mr Y. Vijayanand, Managing Director of SBM.

But to enable SBM accessing capital market, an amendment of the SBI Subsidiary Banks Act needs to be passed so as to remove certain restrictions that come in the way of the subsidiary banks issuing fresh equity capital to shareholders.

Act amendment

The limitations presently faced are that no shareholder of subsidiary banks can have more than 200 shares and the minimum face value of its share pegged at Rs 100 as against the current market trend of having shares with face value of Rs 5 or Re 1.

The bank, in the absence of Act amendment, is also unable to dematerialise its shares as the SBM is already having a small percentage of retail shareholders (their number is 18,000 constituting 5 per cent of the total shares) through its earlier public issue long ago.

Strategy

`We hope the amendment of the SBI Subsidiary Banks aact would be gone through during the coming monsoon session which will also set the pace for all the subsidiary banks going to the capital market one by one over the next one year', Mr Vijayanand said.

Talking to press persons here, the SBM Managing Director said the proposed IPO (which is in fact a follow-up issue) by the bank could be through either rights issue or an IPO or both combined.

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