With its shares turning pricey over the last one year, the State Bank of India’s board on Wednesday approved splitting the bank’s equity shares of face value ₹10 each into 10 equity shares of face value ₹1 each.

Besides SBI, the banks that have announced stock splits (or sub-division of shares) in the last few months are: Jammu & Kashmir Bank, Axis Bank, ICICI Bank and Punjab National Bank.

Broader participation Arundhati Bhattacharya, Chairman of SBI said, “The decision to split the stock will enhance broader investor participation, specifically retail participation, and increase in demand will enhance P/E (price-earnings) ratio.”

When asked whether SBI will go in for a stock split, Bhattacharya, in an interview to BusinessLine on September 10, had said, “How do you know we are not doing it? These are things that we will do when we think the time is right. And we know that the amount (stock price) now is really too big. So, we will see. This is price-sensitive information. I can’t say yes or no.”

A split of shares is usually undertaken when the stock price rises to a high level, making it pricey for investors to acquire. Further, higher number of shares outstanding can result in greater liquidity for the stock.

In the last one year, the share prices of India’s largest bank have jumped 51 per cent.

Falls over 2% On Wednesday, weighed down by the Supreme Court’s decision to cancel all but four of the 218 coal block allocations, SBI’s shares ended 2.68 per cent lower at ₹2,487.40 a share on the BSE.

SBI, in a notice to the BSE, said the reduction in face value of equity shares will get mirrored in its existing global deposit receipts (GDR) programme. Currently, each SBI GDR listed on the London Stock Exchange represents two shares of ₹10 each.

In late June, Axis Bank’s board had approved sub-division of the bank’s equity shares into a face value of ₹2 each in lieu of ₹10 each.

On September 9, ICICI Bank’s board had approved the sub-division of one equity share of the bank of face value ₹10 each into five equity shares of face value ₹2 each. On September 22, PNB’s board had granted in-principle approval for splitting its existing equity shares of face value ₹10 each into five equity shares of face value ₹2 each.

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