The country’s premier bank, State Bank of India (SBI), on Thursday, announced that it plans to set up a holding company for its seven subsidiaries.

Briefing reporters here, SBI Chairman O P Bhatt said the Union Cabinet in April this year approved changes in a banking law to allow greater freedom to SBI’s subsidiaries: State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala, State Bank of Indore, State Bank of Saurashtra and State Bank of Hyderabad.

Mr Bhatt said the bank expects a follow-on public offering by December this year, after the Parliament passes an amendment to its Banking Act in the monsoon session.  It will be allowed to raise Rs 8,000 crore ($1.96 billion) of capital after RBI, being the central bank, divests its 59.73 percent stake to the government, he said.

Life insurance foray
The amendments in the SBI Act will allow the Bank to raise more funds are expected in two months, he said.  Consequent to which SBI assets are expected to grow by 25 per cent in the next three years.

Mr Bhatt said the bank may require up to Rs 50,000 crore ($12 billion) in the next few years to expand its business and invest in ventures including insurance, private equity and wealth management. “We have set a target to raise market capital by a percentage point every year.”  SBI, which has a life insurance joint venture, is also finalise a venture partner for general insurance, according to Mr Deepak Chawla, bank’s managing director for new business.

RBI transfers stake to government
New Delhi, PTI: The government will on Friday buy Reserve Bank of India’s entire stake in the country’s largest lender SBI for over Rs 35,000 crore. The Centre does not need any additional market borrowing for RBI,” the official said.

The government will pick up 31.43 crore equity shares of RBI with a face value of Rs 10 each on June 29 for a cash payment of Rs 35,351.33 crore, official sources said.

SBI shares closed at Rs 1,470.35, up Rs 23.15 or 1.6 per cent, on Bombay Stock Exchange on Thursday. In comparison, the Centre is buying at a lower price of Rs 1,124.7 per share.

The Government had promulgated SBI Amendment Ordinance 2007 on June 21 to amend State Bank of India Act 1955 for buying RBI’s entire shareholding in SBI. The move to buy RBI’s stake is aimed at enabling the central bank to concentrate on its core function of banking regulator.