SBI plans to list 2 regional rural banks

SBI’s move comes just months after it took over five associate banks and the Bharatiya Mahila Bank. NSEBSEState Bank Of IndiaLoading data…





    ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIES State Bank of India (SBI), the country’s largest lender, will likely list two of the 18 regional rural banks (RRBs) it sponsors, unlocking the value embedded in the chosen financiers that have strong profits and robust growth potential.

    NABARD is working on the proposal sent by SBI, which also plans to merge five RRBs in the Northeast and create one bank with a network across the developing region, said Dinesh Khara, MD, associate and subsidiaries at SBI.

    “We plan to take Andhra Pradesh Grameena Vikas Bank (APGVB) and Saurashtra and Saurashtra Gramin Bank (SGB) to the market. These banks are profitable, have a good network in rural and urban areas of their states, and can use this money for growth,” he said.

    APGVB made a net profit of Rs 352 crore in FY17, up from Rs 223 crore a year ago. SGB recorded a Rs 39 crore net profit, up from Rs 17 crore a year ago. Khara said the listing may take two years for completion. SBI plans to become the first public sector lender to list its rural lenders after the enactment of the RRB Amendment Bill 2014.

    The law allows these banks to raise capital from sources other than central and state governments and sponsor banks. The central government owns 50 per cent in all RRBs, states own 15 per cent and sponsor banks own 35 per cent stake in these lenders. The RRB Act says that the combined stake of central government and the sponsor banks cannot fall below 51 per cent.

    SBI’s move comes just months after it took over five associate banks and the Bharatiya Mahila Bank (BMB). “Those banks were in the same commercial lending business carried on by SBI. RRBs by their nature are different but have a great franchise and deposit base,” he said.

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