SBI free to reduce its stake to 51% in subsidiaries

The largest lender in the country State Bank of India will now be free to reduce its stake in subsidiary banks to up to 51 percent. All this is made possible after the Government proposed a bill to be introduced in the Parliament.

Being able to do this, SBI will be able to raise capital and boost its operations.

The Managing Director and CEO of icra Mr. Naresh Takker said "This will give SBI the flexibility to raise funds for its associate banks rather than infusing capital all by themselves. However, it is unlikely that SBI will opt for this option for its associate banks, specially the unlisted banks, since it is in consolidation mode."

Earlier there were 7 subsidiaries of SBI but the bank merged two of them with itself some time ago. Now there are 5 subsidiaries left that includes State Bank of Bikaner & Jaipur, State Bank of Travancore, State Bank of Mysore , State Bank of Hyderabad and State Bank of Patiala.