Government to acquire RBI stake in SBI, Nabard & NHB

The government will acquire Reserve Bank of India stake in State Bank of India (SBI), National Bank for Agriculture and Rural Development (Nabard) and National Housing Bank (NHB) to enable RBI to focus on its regulatory and supervisory functions. The Union Cabinet has given its approval to the following proposals :-

i) Transfer of ownership of shareholding of RBI in SBI to Government of India in June, 2007, against cash payment of valuation amount to be determined on market price in accordance with the SEBI guidelines.

ii) Transfer of ownership of shareholding of RBI in NABARD and NHB to Government of India in June, 2008 at book value.

SBI is a listed entity and its stocks are widely traded. The shareholding of RBI in SBI may be transferred by June, 2007 against cash payment of the valuation amount to be determined based on market price in accordance with SEBI guidelines. The exact value will be worked out while effecting the actual transfer. The actual acquisition cost for the stake transfer is likely to be around Rs. 40,000 crore. This calculation is made assuring the reference price as per SEBI formula of SBI share to be around Rs. 1300/.

As NABARD and NHB are not listed entities, and the RBI shareholding in NABARD and NHB may be transferred at an appropriate time, preferably by June, 2008 at book value.

RBI will now be able to focus on its regulatory and supervisory functions, as this transfer will remove the conflict of interest in due discharge of its duties as the banking regulator and also having ownership in banks/financial institutions.


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