SBI associate banks' may hit market in 18 months
New Delhi, Mar 23 (UNI) The subsidiary banks of the State Bank of India will be ready to come out with their Initial Public Offerings (IPOs) in the next 18 months, SBI Chairman A K Purwar said here today.
Speaking to reporters after the bank chairmen's meeting with Finance Minister P Chidambaram, Mr Purwar said with the Cabinet passing the enabling provision allowing the stock split in the SBI associate banks, each of the subsidiaries can raise capital up to Rs 500 crore from the market.
Earlier in the day, the Union Cabinet approved for introduction in Parliament an amendment to the State Bank of India (Subsidiary Banks) Act, which allows stock split of the subsidiaries.
The amendment to the existing provisions will enable subsidiary banks of the SBI to attract a large number of small individual investors The share prices of the SBI and its three listed subsidiaries rose between 3-20 per cent after the cabinet approval.
The existing provisions of the Act will be amended to comply with certain guidelines issued by the SEBI Depositors Act, and also to enable the seven subsidiary banks to augment their ability to access the capital market for raising funds to provide for easy transferability and trading in their shares.
As per the existing provisions of the SBI (Subsidiary Banks) Act, there is no uniformity in the authorised capital of the subsidiary banks. However, provision exists that the SBI can, with the approval of the RBI, authorise a subsidiary bank of the SBI to increase or reduce its authorised capital.
The existing provisions also lays down that the authorised capital shall be divided into shares of Rs 100 each.But with the amendment, the share can split into Rs 10 each.
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