Even as the SBI (amen­dment) bill, 2010, intro­duced in parliament on Monday proposes to

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allow the bank to dilute the government holding from the minimum thres-hold of 55 per cent to 51 per cent, the bank may not opt for that option at this point of time.

The bank may instead prefer a rights issue, SBI chairman OP Bhatt said in Guwahati on Tuesday.

Bhatt was there in connection with the first meeting of the Assam Investment Advisory Boa-rd. Speaking to news-persons after the meeting, Bhatt said, “The proposed bill is just an enabling mechanism. But let us first exhaust the rights issue. In case the rights issue does not come through for some reasons, then we may have to opt for other opt­ions to raise funds. And there are quite a few options.”

The government at present holds a 59.41 per cent stake in SBI. The earlier minimum threshold limit for government stakes was 55 per cent, which the government has now proposed to bring down to 51 per cent.

The government may also allow the bank to issue preference shares. State Bank of India can issue 10.68 crore shares or 16.8 per cent of additional shares to maintain the government's share hold-ing at 51 per cent. “If there is a rights issue, the question of equity dilution does not arise,” Bhatt said.

Asked how much the bank would raise, Bhatt said that depends on the share price at that time. On the lower side, it could be between $3 -$4 billion while on the higher side it could be $4-$5 billion. The bank would ideally like to raise this amount over the next 12 months.

Bhatt didn't comment on SBI's plans to raise any further funds via equity issue apart from the planned rights offering.

Meanwhile, State Bank of India has gone for settl­ement of its loans to small and medium borrowers of up to Rs 10 mlllion of loans for each account till March 31, Bhatt said.

The scheme would be open till March 31. "We are incentivising borro-wers to come and settle their accounts ,"Bhatt told reporters responding to queries. He, however, refused to specify the amount of loans that SBI plans to settle by this way.

''Since the cap for each account is just Re 1 crore, the amount would not be huge but the number of accounts would be large,'' Bhatt said.

Responding to another query, Bhatt said that he did not see lending rates rising till May.

SBI's scrip was trading at Rs 2043.85 or 1.28 per cent down on the BSE on Tuesday.