India Intelligence Report



   Govt to Buy SBI, NABARD off RBI

  The government has decided to buy the State Bank of India and NABARD from the RBI.

In a surprising move, the government has decided to buy India's largest bank State Bank of India (SBI) and National Bank for Agriculture and Rural Development (NABARD) from the current holders Reserve Bank of India (RBI). The RBI currently has a 59.7% stake in SBI and the government will execute cash-less transaction worth Rs. 40,000 crore (USD 9.09 billion) in the upcoming budget.

The official explanation is that RBI wants the transfer of SBI after 50 years of ownership to avoid a conflict of interest with the regulator owning a large equity exposure to a regulated entity. While the government will transfer the large amount of money to RBI, the money will be returned as surplus back to the government in July when the RBI closes its books.

Apart from the conflict of interest motive, it is not known whether the government plans to disinvest a chunk of the bank to garner money for its social programs.