State Bank of India (SBI) is trading higher by 3% at Rs 2,050 after the government agreed to infuse Rs 7,900 crore into the bank through a preferential issue.
 
The government, on Monday, approved increase in SBI's issued capital by way of preferential allotment of equity shares of about Rs 7,900 crore, the India’s largest lender said in a statement to the stock exchange.
 
“Following the infusion, there is a possibility that the outlook for the bank's rating, which was downgraded by Moody's in October, could improve," reports suggest.
 
One of the grounds for Moody's downgrade was that the bank's tier-1 capital adequacy ratio (CAR) had slipped to 7.60%. The capital infusion will improve CAR to beyond 9%.
 
A combined 100,000 shares have changed hands on the counter in opening deals on both the exchanges.