Shares of India's largest state-run lender SBI slumped on Monday after the firm shelved plans for listing its general insurance arm public saying that there is no need for additional capital now.
Shares of India’s largest state-run lender SBI slumped on Monday after the firm shelved plans for listing its general insurance arm public saying that there is no need for additional capital now. SBI shares slumped by more than 2.3% to hit the day’s low at Rs 284.55 on BSE. Notably, State Bank of India has shelved its plan to take its general insurance arm public as there is no need for additional capital now, chairman Rajnish Kumar told news agency PTI. The bank was initially looking to list General Insurance arum in FY21. SBI General, valued at over Rs 12,000 crore recently, is a joint venture between SBI and Insurance Australia Group with a 26% ownership.
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While the bank has shelved plans for general insurance-arm, Rajnish Kumar said that the SBI cards listing could happen by the end of FY20. In August-19, SBI said that it has received the board’s nod to divest its stake in the card and payment services arm through the IPO route. The largest public sector bank currently holds 74% stake in SBI Cards. “The Executive Committee of Central Board of the Bank at its meeting held today has given in-principle approval to explore the possibility of diluting SBI’s stake in SBI Cards & Payment Services Private Limited, a subsidiary company through IPO route at an opportune time, subject to the approval of RBI and other regulatory agencies in this regard,” SBI said in an exchange filing.
SBI Cards claims to be second largest credit card issuer after HDFC Bank. Rajnish Kumar said that its foreign partner can also choose to dilute its stake through the IPO (initial public offering) in SBI Cards. Sharing the update on SBI Cards IPO, Kumar said that the feelers from investors suggest that they are excited to invest in the company. The IPO will be launched in the January-March quarter of the current fiscal and based on the valuation arrived at, SBI will take a call on the stake sale, he added.