New Delhi: The government today approved issuing special marketable securities worth Rs 9,995.99 crore to subscribe to State Bank of India's rights offer. The Cabinet, which met here today, gave its approval to modify an earlier decision to give SLR (statutory liquidity ratio) status to the government securities. The issuance of such securities would have allowed SBI to meet a part of its SLR requirement.

Under SLR provisions, banks have to park 25 per cent of their deposits in government bonds. "The government is likely to receive around Rs 1,449 crore additionally by way of dividend and taxes from the bank during 2008-09 as against an expenditure of around Rs 825 crore as interest to be paid to the bank for the proposed securities," an official statement said.

SBI has decided to raise Rs 16,736.31 crore by issuing about 10.5 crore shares on a rights basis. The issue, which opened on February 18 will close on March 18. The government had earlier decided to invest about Rs 10,000 crore in SBI to maintain its stake of 59.7 per cent.

However, the Finance Ministry had to approach the Cabinet to review its decision as the Reserve Bank declined to give SLR status to government bonds - to be offered to SBI for subscribing to the equity shares.

Sources said that although the Finance Ministry will continue to take up the matter with the RBI and request it to notify the proposed securities as SLR securities, due to time constraint, it had to ask the Cabinet to amend its decision taken on November 29 last year.

Source : PTI