State Bank of India, the country's largest lender, expects the government to inject capital any time, although it is yet to get a formal commitment on the amount, a senior official said on Friday.


State Bank of India

We have received formal confirmation from the government that capital is on way. It is expected any time, Diwakar Gupta, chief financial officer, told Reuters.

Analysts said the injection could be between 50-60 billion rupees.

Earlier in the month, the lender said it expects a capital infusion of 30-40 billion rupees by December-end or at the latest by March.

Analysts said the injection could be between 50-60 billion rupees.

The bank, which is 59 percent state-owned, has since last year sought as much as 200 billion rupees from the government through a rights issue in order to build up its capital base.

Analysts said higher subsidy bills and a likely shortfall in the government's target for selling holdings in state firms is likely to limit New Delhi's flexibility in injecting cash into state banks in the near term.

The government is struggling on multiple fronts, with oil subsidy ballooning, and the food subsidy bill on the cards, said Manish Bandi, Fund Manager, IIFL.

The Oil ministry has sought additional subsidy of 420 billion rupees for the six months ending March, while plans to expand food a subsidy programme could worsen strained finances.

In early October, Moody's downgraded the standalone rating for State Bank of India, the country's dominant lender, citing modest capital and weakening asset quality.

Gupta said the government will ensure the bank has 8 percent tier I capital adequacy by March-end. At the end of September, it stood at 7.47 percent.

At 12:09 p.m. (0640 GMT), shares of SBI were up 0.68 percent at 1,640 rupees. The stock has fallen more than 41 percent this year.