SBI Amendment Bill cleared, bank can now raise capital

Dec 04, 2009 at 19:44 

The Cabinet cleared the State Bank of India 

 Amendment Bill yesterday paving the way 

for the government to lower its stake in to 51%.

 India's largest public bank can now go in 

for a follow-on or rights issue. The government currently holds 59.41% 

stake and can raise Rs 12,549 crore via the 8% stake sale. 

The bill may now be introduced in this session of Parliament. 

The stock is buzzing today.

Commenting on the same, Ashvin Parekh, Partner and National

 Leader - Global Financial Services, Ernst & Young, says the 

bill was long awaited. "It gives the bank leeway to raise 

further capital. It also allows it to go in for a bonus issue or offer 

employee stock options."

Will SBI consider State Bank of Indore’s share swap ratio?

 Dec 04, 2009 at 16:16 

Reports suggest that the State Bank of India 

 panel is likely to consider State Bank ofIndore’s

 share swap ratio. 

SBI plans to offer 34 shares

 for every 100 State Bank of Indoreshares.

Meanwhile, the government has said that it would play a 

supporting role in the public sector banks' consolidation.

 “Banks should themselves initiate any merger plans. 

There isno specific direction to any bank to consider a 

merger with another.” 

All state-owned banks posted profit

 in last three fiscal years.

Source : Moneycontrol

United Bank Plans IPO This Fiscal Year

-By Mukesh Jagota,

NEW DELHI - State-run United Bank of India
 proposes to raise capital through an initial public 
offering this financial year to March 31, Junior
Finance Minister Namo Narain Meena said Friday.

The bank, fully-owned by the government, will raise 
funds through a sale of 50 million shares, he said in
 reply to lawmakers' queries in the lower house of Parliament.


Source:dowjones

SBI gets govt nod for acquiring State Bank of Indore

4 Dec 2009, 1751 hrs IST,

NEW DELHI: The Indian government has given approval 
to State Bank of India to initiate the process of 
acquiring one of its associate lenders,
State Bank of Indore, the junior finance minister
told lawmakers on Friday.

SBI, India's largest bank, has already acquired one
 of its subsidiaries - State Bank of Saurashtra. It has six
other associate banks and plans to take over all associates
 eventually. "SBI has already initated the process,"
Namo Narain Meena told the lower house of parliament
in a written reply.

State Bank of Indore had informed the Bombay Stock 
Exchange on Oct 31 that its board had approved the 
proposed acquistion of the bank by SBI, including a
share exchange ratio proposing allotment of 34 equity
 shares of SBI in lieu of every 100 equity shares of
State Bank of Indore.

The minister said bank employees' unions have expressed 
apprehensions over the proposed consolidation in the
banking sector, particularly state-run banks.
"Some of the apprehensions are closing of bank branches,
 retrenchement of existing employees, regional sentiments
about some particular banks, etc," he said.

He also said government has not given "direction to any
specific bank to consider proposal for merger or
amalgamation with a particular bank."
The initative for consolidation had to be taken
 by the managements of the banks and government
 would play a supportive role as the common stakeholder.

 Source:REUTERS

SBI Joint Venture With Insurance Australia to Start in 2010

By GURDEV SINGH VIRK and BILL LINDSAY

SYDNEY -- SBI General Insurance Company--a joint venture between the State Bank of India and Insurance Australia Group Ltd. -- plans to begin operations in the first half of 2010.

But this is subject to final approvals from India's Insurance Regulatory and Development Authority, state-run State Bank of India said in a statement to the Bombay Stock Exchange.

IAG said in a separate statement to the Australian Stock Exchange on Friday that it will invest 5421 million rupees ($117.8 million), or around A$126 million, for its 26% stake in the JV.

Australia's largest general insurance company by premiums written said it holds an option to increase its stake in the JV to 49%, subject to regulatory and other conditions.

IAG said it will fund its investment from internal resources and does not expect any further capital investment in the JV will be required until at least the fourth year of its operation.

RBI CIRCULAR ON CAPITAL ADEQUACY – RISK WEIGHTAGE ON LENDING THROUGH COLLATERALIZED BORROWING AND LENDING OBLIGATION (CBLO)

DEC 4, 2009



DNBS.PD/ CC.No.165/03. 05.002/2009- 10 December 1, 2009

Capital Adequacy – Risk weightage on Lending through
Collateralized Borrowing and Lending Obligation (CBLO)

Investing by NBFCs in instruments like Collateralized Borrowing
 and Lending Obligations (CBLOs) results in their exposure to
 Central Counter Parties (CCPs) like Clearing Corporation of India Ltd. (CCIL).

2. It is therefore clarified that the counterparty credit risk,
 arising out of exposure of NBFCs to CCIL on account of
securities financing transactions (CBLOs) will carry a risk
weight of zero, as it is presumed that the CCP’s exposures
to their counterparties are fully collateralised on a daily basis,
thereby providing protection for the CCP’s credit risk exposures.
The deposits / collaterals kept by NBFCs with CCIL
will attract a risk weight of 20%.

3. A copy each of amending Notifications No. DNBS. 211 / CGM (ANR)-2009 and
 Notification No. DNBS. 212/CGM (ANR)-2009 both dated
 December 1, 2009 is enclosed.
Yours sincerely,
(A. Narayana Rao)
Chief General Manager-in-Charge
Encl: As above

RESERVE BANK OF INDIA/
DEPARTMENT OF NON-BANKING SUPERVISION
CENTRAL OFFICE
CENTRE I, WORLD TRADE CENTRE,
CUFFE PARADE, COLABA,
MUMBAI 400 005.
Notification No. DNBS. 211 / CGM (ANR)-2009 dated December 1, 2009
In exercise of the powers conferred by Sections 45J, 45JA, 45K and 45L of the
Reserve Bank of India Act, 1934 and of all the powers enabling it
 in this behalf, and in partial modification of its
 Notification No. DNBS. 192 dated DG (VL)-2007 dated
 February 22, 2007, the Reserve Bank hereby notifies as follows, namely-
In the Notes under (v) (d) of Explanations (1) of paragraph 16, the
 following shall be added after sub clause (3):
“(4) The counterparty credit risk, arising out of exposure
 of NBFCs to CCIL on account of securities financing
 transactions (CBLOs) will carry a risk weight of zero,
 as it is presumed that the CCP’s exposures to their
counterparties are fully collateralised on a daily basis, thereby
providing protection for the CCP’s credit risk exposures.
The deposits / collaterals kept by NBFCs with CCIL will attract a risk weight of 20%”.
(A. Narayana Rao)
Chief General Manager in Charge
RESERVE BANK OF INDIA
DEPARTMENT OF NON-BANKING SUPERVISION
CENTRAL OFFICE
CENTRE I, WORLD TRADE CENTRE,
CUFFE PARADE, COLABA,
MUMBAI 400 005.
Notification No. DNBS. 212 / CGM(ANR)-2009 dated December 1, 2009
In exercise of the powers conferred by Sections 45J, 45JA, 45K and
 45L of the Reserve Bank of India Act, 1934 and of all the powers
 enabling it in this behalf, and in partial modification of its
Notification No. DNBS. 193 dated DG (VL)-2007 dated
February 22, 2007, the Reserve Bank hereby notifies as follows, namely-
In the Notes under (v) (d) of Explanations (1) of paragraph 16,
the following shall be added after sub clause (3):
“(4) The counterparty credit risk, arising out of exposure of
NBFCs to CCIL on account of securities financing transactions
(CBLOs) will carry a risk weight of zero, as it is presumed
that the CCP’s exposures to their counterparties are fully
 collateralised on a daily basis, thereby providing protection for
the CCP’s credit risk exposures. The deposits / collaterals
 kept by NBFCs with CCIL will attract a risk weight of 20%”.
(A. Narayana Rao)
Chief General Manager in Charge