Government looking into SBI Rs 20,000 crore rights issue: Finance Ministry

MUMBAI: The Finance Ministry today said it is "looking into the matter" of State Bank of India's over Rs 20,000-crore rights issue, which has been in the works for over a year now.

When asked about the SBI's rights issue on the sidelines of a function here, the new Banking and Financial Services Secretary Sashikant Sharma told PTI, "We are looking into the matter".

Sharma's predecessor R Gopalan had in February said that the government would clear the rights issue in the last fiscal itself.

Recently, there have been reports that the rights issue may not happen this fiscal, considering the tight finances of the government, which holds nearly 60 per cent stake in the bank.

If the government allows the issue size at Rs 20,000 crore, then it will have to cough up between Rs 11,000 and Rs 12,000 crore towards subscribing the issue to maintain its stake in the bank at 59 per cent.

In the last SBI rights issue, the government had issued bonds to the bank instead of giving cash.

But that is not an option now, as the Finance Ministry has decided against off-budget financing. Moreover, in this year's Budget, no provision has been made for such a huge outgo towards the rights issue.

Earlier this week, SBI Chairman Pratip Chaudhuri while announcing the annual results on May 17 had said the issue is "round the corner".