Govt acquires entire RBI shareholding in SBI

New Delhi, June 29 (UNI) In its biggest ever cash purchase, Government today acquired the entire Reserve Bank of India (RBI) shareholding in State Bank of India (SBI) for more than Rs 35,531 crore.

The transaction comprised 31,43,39,200 equity shares with face value of Rs 10 each at Rs 1130.35 per share.

Though SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, known as Takeover Regulations, per se were not applicable in this transaction, for sake of greater transparency, the valuation of the RBI stake in SBI was worked out as per SEBI guidelines taking February 28, 2007, as the 'reference date.' This is the day on which the decision of the Government to acquire RBI stake in SBI was announced by the Finance Minister in his Budget Speech and the intention of the Government to acquire SBI was made public.

The government has also decided to acquire RBI shareholding in the National Housing Bank (NHB) and the National Bank for Agriculture and Rural Development (NABARD) by June 2008.

The Committee on Banking Sector Reforms (Narasimham Committee II) has observed that it was inconsistent with the principles of effective supervision that the regulator was also an owner of a bank and this would require the Reserve Bank of India (RBI) to divest its holding in banks and financial institutions.

In its Monetary and Credit Policy for the year 2001-02, RBI had announced its intention to transfer the ownership of shares in SBI, NABARD and NHB in favour of the Government of India.

Accordingly, RBI sent a proposal to transfer its shares in these entities to the Government of India.

RBI holds 59.73 per cent stake in SBI, 72.50 per cent in NABARD and 100 per cent in NHB.

The Finance Minister, in his Budget Speech for the year 2007-08, announced the proposal of the Government to acquire entire stake of RBI in SBI, and provided a sum of Rs 40,000 crore for transfer of RBI shareholding in SBI to the Government of India. An Ordinance was promulgated to provide requisite statutory provisions in State Bank of India Act, 1955 to facilitate this transaction, and Government appointed June 29, 2007 the date for transfer of stake.

UNI