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Govt To Infuse Up To $1.6 Bn In SBI

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The government will infuse 45 billion to 80 billion rupees ($919.7 million to $1.6 billion) of funds in top lender State Bank of India (SBI) by March 2012, D.K. 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 200 billion rupees 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 per cent.

Its Tier 1 capital was 7.6 per cent at the end of June, below the government's pledged 8 per cent 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.

(Reuters)