Govt buys RBI stake in SBI for Rs 35,531cr

The government today acquired the Reserve Bank of India's (RBI) shareholding in State Bank of India (SBI) for Rs 35,531.33 crore.

An ordinance was promulgated to amend the State Bank of India Act, 1955 to facilitate this transaction.

The government has acquired 59.73 per cent stake in SBI consisting of 31,43,39,200 equity shares with face value of Rs 10 each at Rs 1130.35 a share for a total of Rs 35,531,33,14,720.

The valuation of the RBI stake in SBI was worked out as per the Securities and Exchange Board of India guidelines taking February 28, 2007 as the reference date.

SBI's share price today rose 3.74 per cent to close at Rs 1525.3 compared to Thursday's close of Rs 1470.35.

In his Budget speech, Finance Minister P Chidambaram had announced that government would acquire the RBI's stake in SBI and had made a provision of Rs 40,000 crore for acquiring the stake.

The government would also acquire the RBI's 72.50 per cent in the National Bank for Agriculture and Rural Development and 100 per cent stake in National Housing Bank by June, 2008.

The Narasimham Committee-II on Banking Sector Reforms had observed that it is inconsistent with the principles of effective supervision that the regulator is also an owner of a bank and had suggested that RBI should divest holding in banks and financial institutions. Accordingly, RBI sent a proposal to transfer its shares in these entities to the government.