Govt to infuse up to $1.6 bn in SBI by March: Official

The government will infuse Rs 45 billion to Rs 80 billion (USD 919.7 million to USD 1.6 billion) of funds in top lender State Bank of India (SBI) by March 2012, DK Mittal, secretary of financial services said on Thursday.

State-run SBI, which accounts for one quarter of lending in India, has been reeling under higher provisions for bad loans and lower profits in the last two quarters, has since last year sought as much as Rs 200 billion from the federal government through a rights issue.

SBI expects surpluses earned during the year, apart from government funds, to help boost its Tier-I capital to 9%.

Its Tier 1 capital was 7.6% at the end of June, below the government's pledged 8% target in state banks.

Last week, ratings agency Moody's downgraded SBI's standalone rating to D+ from C- on a scale of A to E, citing low Tier 1 capital, its recent failure to raise capital and worsening asset quality.