SBI seen to suspend rights issue $654.16mn capital infusion

India was not in favour of fund raising via rights issue since it would entail additional expenditure for the government.

The finance ministry has agreed to infuse about Rs 3,000 crore ($654.16 million) into State Bank of India in a compromise solution to meet the bank's immediate capital needs. SBI is now likely to defer its proposed rights issue to later in the year or even next fiscal.

"We are yet to finalise the modalities of the capital infusion," a finance ministry official told ET. Asenior SBI official told ET that the bank had not yet heard from the finance ministry, according to a report in Economic Times.

The finance ministry was not in favour of State Bank of India raising capital through a rights issue since it would have entailed additional expenditure for the government in what is likely to be a financially difficult year.