The government will on Friday buy Reserve Bank's entire 59.7 per cent stake in the country's largest lender SBI for more than Rs 35,000 crore (Rs 350 billion) in cash. The Centre will pick up 31.43 crore equity shares of RBI with a face value of Rs 10 each on June 29 for a cash payment of Rs 35,351.33 crore (Rs 353.51 billion), official sources said. SBI shares closed at Rs 1,470.35, up Rs 23.15 or 1.6 per cent, on the Bombay Stock Exchange on Thursday. In comparison, the government is buying the stake at a discounted price of about Rs 1,124.7 per share.
In Mumbai, SBI chairman O P Bhatt said government equity would be brought down to 51 per cent once necessary transfers of RBI's share in SBI to the government are completed. The Government had promulgated SBI Amendment Ordinance 2007 on June 21 to amend State Bank of India Act 1955 for buying RBI's entire shareholding in SBI.
The move to buy RBI's stake is aimed at enabling the central bank to concentrate on its core function of banking regulator. The deal will not have revenue implications for the government since RBI is expected to transfer the surplus to the Centre during the first half of August.
As per the normal procedure, a bill will be moved in the coming session of Parliament to replace the ordinance. Sources said the Finance Ministry had to push for an ordinance as a bill to amend the Act is pending with a Parliamentary standing committee.
The Ministry wanted to insert a clause enabling it to buy RBI's stake when it came back to the House, but in the absence of the standing committee report, it pushed for an ordinance to close the transaction in time.
© Copyright 2007 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
|
Advertisement
Email this Article 
Print this Article