India seeks legislation downsizing stake in State Bank

Selling of shares aimed to raise funds to maintain bank's 12 percent capital adequacy ratio.

The Indian government, which is currently required to hold at least 55 percent of the Mumbai-based lender, intends to introduce legislation in both houses of parliament and secure approval when lawmakers reconvene this month, an official said, declining to be named before an announcement. India holds 59.4 percent of State Bank of India, according to a report in Bloomberg.

The lender, which accounts for a fifth of India's banking system by assets, will need 360 billion rupees ($7.6 billion) over the next five years to maintain its capital adequacy ratio at 12 percent and grow credit, Chief Financial Officer S.S. Ranjan said on 2 November. State Bank raised 167 billion rupees in its first share sale in more than a decade in March 2008.

Shares of State Bank were unchanged at 2,103 rupees as of 10:39 a.m. local time 4 November in Mumbai. They have gained 63 percent this year, matching the 61 percent advance in India's benchmark Sensitive Index.

India's upper and lower houses of parliament will convene on 19 November for the winter session that will continue until 22 December. Parliament has been in recess since the budget session ended on 7 August.