Govt to subscribe to SBI rights issue:

Finance minister P Chidambaram on Saturday said the Union government has decided to subscribe to the State Bank of India’s rights issue in a non-cash transaction [SBI,Bank] Confirming reports, the FM said, “the decision is a non-cash transaction which would see the bank (SBI) setting up a redemption fund that would comprise dividends and additional taxes that SBI would pay.” SBI’s Rs 17,000-crore rights issue will be one of the largest public offerings by an issuer in India. The government would need to pump in Rs 10,000 crore as its contribution to the offering. It holds controlling interest in the country’s largest bank after the shares were transferred to it from the Reserve Bank of India. If things go as per plans, the rights issue will be launched in the second week of February and the process will be over by the second week of March ’08. “If something on similar lines has to be done for other PSU banks, then it would depend on how the banks pay the dividends and additional taxes,” Mr Chidambaram added