State Bank of India plans to raise Rs 10,000 crore (US$2.5 billion)

State Bank of India plans to raise Rs 10,000 crore (US$2.5 billion) by December 2007, either through a follow-on public issue or a rights issue. SBI would have to raise at least a part of the required capital by way of a rights issue, as at the prevailing share price, it can raise only Rs 4,042 crore by diluting the government holding to 55 per cent.

The government holding in SBI stands at 59.73 per cent. The bank has room to dilute only 4.73 per cent as the government holding cannot fall below the stipulated 55 per cent.

This will be State Bank's first equity offering since it raised $350 million in October 1996.

Indian banks have been raising funds to meet the demand for loans from consumers and corporates in Asia's third-largest economy, which grew 9.4 percent in the fiscal year to March 2007.

ICICI Bank had made the biggest offering by an Indian company by mobilising over Rs 20,000 crore ($4.9 billion) through a follow-on public offer and American depository receipts issue. while HDFC Bank raised $698 million by selling American Depositary Shares (ADS) to strengthen its capital base and to support future growth.

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