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Country’s largest lender SBI decided to raise Rs 16,736.31 crore from its much-awaited rights issue, which will be priced at Rs 1,590 a share. According to a decision of the Central Board of the bank here, existing shareholders would be given a share for every five shares.

The price at which shares would be offered represents about 36 per cent of discount to State Bank of India’s current share price. This means shareholders would get a share at a premium of Rs 1,580, if face value of Rs 10 is considered, but at a discount of Rs 889, if today’s current price at Rs 2,469 on the Bombay Stock Exchange is taken into account.

For the rights issue, the bank also decided to raise its issued capital to Rs 650 crore from the existing Rs 526.30 crore. The bank would also issue shares to employees under Employees Stock Purchase Scheme, SBI said in a filing to BSE.

The decision of the SBI’s board came one-and-a-half months after the union cabinet gave nod to the rights issue. The issue would also be offered to existing SBI’s Global Depository Receipts (GDR) holders.

The union government is expected to invest around Rs 10,000 crore in the rights issue to maintain its stake at over 59 per cent, for which it would issue bonds to SBI. “We have decided to subscribe to the rights issue. We intend to issue bonds of Rs 10,000 crore for the purpose,” finance minister P Chidambaram had said after the Cabinet meeting, which approved the rights issue.

These bonds would be redeemed through the proposed Securities Redemption Fund (SRF), he said adding the SRF would be funded through taxes and dividends received from SBI.

Annual cost of servicing these bonds would come at around Rs 790 crore, Chidambaram had said, adding the government is required to put at least this much amount to the redemption fund. “We are subscribing to the rights issue, but we will pay to it on deferred basis,” he had said.

The bank has been exploring various options to mop up funds, but a rights issue would allow the bank to raise capital without diluting the government shareholding. It is understood that the government was not in favour of a follow-on public issue, where its stake would have been diluted from the current over 59 per cent to 55 per cent, the minimum prescribed under the SBI Act.

Earlier this fiscal, the government purchased 59.7 .per cent stake of Reserve Bank in SBI in a revenue-neutral exercise.  SBI Life Insurance has invited bids from IT vendors for integrated Treasury System Solution.

“The expression of interest has been invited from software vendors for the supply, installation, customisation and support of softwares for treasury operations of its investment functions,” SBI Life said. The insurer proposes to implement an integrated system solution for taking care of the entire gamut of activities of front-office, mid office and back office functions, it said.

The activities involve critical factors like effectively managing the portfolios in debt, equity, money market and hybrid securities, and calculation of NAV on a daily and timely basis through the system and capture all types of corporate action monetary, non monetary, it said. The last date for submission of non-binding EoI is January 28.

The company’s total premium income is expected to touch Rs 7,000 crore for 2007-08, compared to Rs 2,900 crore in the preceding fiscal. Life Insurance with a paid-up capital of Rs 600 crore is a joint venture between the State Bank of India and Cardif SA of France.