SBI to cut stake in arms in 5 months

State Bank of India (SBI) would complete stake dilution in subsidiaries within 4-5 months, chairman A K Purwar said on Tuesday.

The dilution would be as per the provisions of State Bank of India (Subsidiary Bank) Act, 1959. The Act is due for amendment in Parliament. Post-dilution, the bank's stake in subsidiaries would be 51 per cent.

"The proposed bill is before Parliament and we expect it to be passed in a month after which State Bank of India would embark upon the process of diluting its stake (in subsidiary banks)," Purwar told reporters here.

He was speaking on the sidelines of the annual general meeting of State Bank of Indore.

The proposed amendment to State Bank of India (Subsidiary Bank) Act will enable the bank to issue bonus shares and split shares of its arms apart from diluting its holding. Purwar also said treasury losses of most SBI subsidiaries have gone up during this financial year owing to a rise in gilt yield.

"The high yield on government securities is an added burden on our subsidiaries to make provision for depreciation," Purwar said.

On merger of SBI subsidiaries with itself, Purwar said the process was on hold, but if shareholders of subsidiary banks felt that their value would rise by merging with SBI, then the whole issue would be again considered.

"On our part, the question of legal merger of SBI subsidiaries with itself is not on the agenda," Purwar said.

Purwar also said State Bank of India and all its subsidiaries might double automated teller machine charges from Rs 50 annually owing to pressure from competitors.

Meanwhile, State Bank of Indore managing director C Narasimhan said the bank was in talks with institutional investors, both domestic and foreign, for offloading its stake.

Currently, State Bank of India is the majority shareholder in State Bank of Indore with around 98 per cent holding.