State Bank of India (SBI) on Tuesday said it has received board approval to divest up to 10% stake in SBI Life Insurance. This comes days after the bank announced that Insurance Australia Group (IAG) would increase its stake in their general insurance joint venture SBI General from 26% to 49%.
In a regulatory filing, SBI said, “The Executive Committee of Central Board (ECCB) on March 30 authorised divestment of SBI’s stake in SBI Life Insurance by up to 10%.”
SBI owns 74% of the total capital and BNP Paribas Cardif has the remaining 26% in SBI Life Insurance — a joint venture between SBI and BNP Paribas Cardif of France. According to its website, SBI Life Insurance has an authorised capital of R2,000 crore and a paid-up capital of R1,000 crore.
Speaking to a private news channel, SBI MD VG Kannan said Cardiff has shown an inclination to buy the stake but it has not yet been decided how much stake would be given to them. “This divestment will be in SBI Life and we are in discussion and we will take a call as to whether we will be selling it to Cardiff or to any other person as is appropriate,” he said.
Earlier in March, Parliament had passed the Insurance Laws (Amendment) Bill, 2015, to increase foreign investment in insurance companies to 49% from the current 26%. Kannan indicated that although the valuation has not been done, a rough calculation of the 10% stake sale as per market comes to around R2,500 crore. He said the bank did not have plans to sell more than 10 % as of now and is not considering an IPO immediately for SBI Life.