The Hindu Business Line : Govt may issue commitment letter for SBI rights offer

New Delhi, March 4 The Government is likely to issue a commitment letter to State Bank of India by March 18 for its entitlement in the Rs 16,700-crore rights issue of the bank.

It had already decided to issue bonds (special marketable securities) worth Rs 9,995. 99 crore to SBI for the rights offering.

Official sources said that the commitment letter would be issued as the Government may not be in a position to issue the bonds by March 18, the date of closure of the rights issue.

The Securities and Exchange Board of India has also given its nod for the Government to furnish a commitment letter and later issue the bonds when the shares under the rights issue are actually allotted. Earlier, it was indicated that the bonds would be issued on the last date of the rights offering.

The Government currently holds 59.73 per cent stake in SBI. The rights issue, which opened on February 18, is slated to close on March 18. Under the issue, SBI is offering one share of Rs 10 each for every five held at a price of Rs 1,590 per share.

The Union Cabinet had, last month, modified its November 28, 2007 decision to specify that the Government’s rights issue entitlement amounting to Rs 9,995.29 crore would be subscribed by issue of “special marketable government securities” instead of SLR marketable government securities.

More Stories on : Public Sector Banks | Rights Issue | State Bank of India

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