SBI mulls launching $4.27bln rights issue in 2011

India government eyed to subscribe in the multibillion rights issue to take place in H2FY11.

The country's largest lender State Bank of India (SBI) expects to launch a Rs 20,000-crore ($4.27 billion) rights issue in the second half of FY11, Chairman OP Bhatt said.

The government was likely to fully subscribe to the issue, he said, adding that the bank’s base rate was likely to be 7.5-8.5%, according to a report in Money Control.

Meanwhile, commenting on the system’s cash condition Bhatt had earlier said that it was likely to remain tight. Talking specifically about the bank’s cash position, he said, "We are okay. We are comfortable but not in surplus. Yesterday (Tuesday) we borrowed from the repo."

He also said the tight cash conditions could impact the bond market.