Govt to buy 59% SBI stake from RBI

Govt to buy 59% SBI stake from RBI

BS Reporter / New Delhi February 1, 2007

To let Reserve Bank of India (RBI) focus on regulation, the union cabinet today approved the transfer of Reserve Bank shareholding in State Bank of India (SBI) to the government by June 2007.

It also gave nod for transfer of unlisted National Bank of Agriculture and Rural Development (Nabard) and National Housing Bank (NHB) to the government by June, 2008.

"The regulator should not be the owner of the bank," Finance Minister P Chidambaram said.

The estimated acquisition cost of RBI's 59.7% stake in SBI is likely to be around Rs 40,000 crore, and the government will make the payment in cash as the commercial bank is a listed entity. As per market regulator Sebi formula, the SBI share purchase price is likely to be Rs 1,300 per share.

"Market forces will determine the actual cost. The price of the SBI share at Rs 1,300 has been determined at today