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Government's Gift to SBI Shareholders
In August 2010, the then Union Finance Minister Pranab Mukherjee sought to cut the government’s stake in the State Bank of India (SBI) from 55% to 51% and push the bank to raise more capital from the market. Good idea. But, in a course reversal, on 5 December 2012 – at a time when the government’s stake at the SBI had already reached 61.58% – the media reported that the government would infuse an additional Rs 4,000 crore into the ailing SBI.
In August 2010, the then Union Finance Minister Pranab Mukherjee sought to cut the government’s stake in the State Bank of India (SBI) from 55% to 51% and push the bank to raise more capital from the market. Good idea. But, in a course reversal, on 5 December 2012 – at a time when the government’s stake at the SBI had already reached 61.58% – the media reported that the government would infuse an additional Rs 4,000 crore into the ailing SBI. On 19 January 2013, the bank board approved a government injection of Rs 3,004 crore through preferential shares, and on 31 January it was announced that the government would increase its stake in SBI by 2.5% through infusion of Rs 7,900 crore. Finally, the news on 15 February was that the government will use part of its proceeds of Rs 40,000 crore from sale of its stakes in state-run companies to infuse capital in ailing state banks, including the SBI.
Government as Santa Claus
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