State Bank of India on Monday said it has opened qualified institutional placement (QIP) issue of equity shares of ₹1 each to qualified institutional buyers. This is part of the bank’s plan to raise equity capital of up to ₹15,000 crore during FY18.
The floor price of the QIP issue, based on the formula prescribed by the market regulator’s regulations, is ₹287.58 an equity share, the bank said in a stock exchange filing. It may offer a discount of not more than 5 per cent to the floor price.
This capital raising programme comes in the backdrop of public sector banks’ facing pressure to enhance their capital base to meet Basel III regulatory capital stipulation and to make provisions for bad loans.
According to the bank, its capital to risk weighted assets ratio (CRAR) as well as for the Group as a whole is estimated to be well above the Regulatory CAR in the medium horizon of 3-5 years. However, to maintain adequate capital, it has options to augment its capital resources by raising subordinated debt and perpetual debt instruments, besides equity as and when required.‘Capitalised to absorb shocks’
SBI Chairman Arundhati Bhattacharya observed that despite the challenges during the last financial year, the bank remained well capitalised to absorb future shocks and maintain its future growth trajectory. The Capital Adequacy Ratio (CAR) of the bank under Basel III stood at 13.11 per cent in March 17 and Tier 1 at 10.35 per cent.
India’s largest bank utilised various options to increase capital by ₹28,828 crore during FY2017.
The bank raised fresh Additional Tier 1 capital to the tune of ₹9,100 crore during FY2017. The Centre infused ₹5,681 crore, while the sale of the bank’s non-core assets/strategic investments added ₹2,662 crore. Retained earnings contributed the remaining ₹8,379 crore towards the capital augmentation exercise, SBI chief said in the annual report.
On Monday, SBI shares closed at ₹287.35 apiece, down 0.02 per cent, on the BSE.