Finance Ministry Pushes PSBs to List Subsidiaries for Long-Term Value Creation

30 Jun 2025 , 01:42 PM

The finance ministry has advised public sector banks (PSBs) to consider listing their subsidiaries and joint ventures once these entities expand their operations. The goal is to help banks unlock long-term value and generate strong returns on their investments.

Sources familiar with the matter said nearly 15 such subsidiaries or joint ventures are being reviewed for potential initial public offerings (IPOs) or stake sales over the next few years. Before any monetisation, banks are being encouraged to improve corporate governance, enable professional decision-making, and enhance operational efficiency within these businesses.

To support this, the ministry has suggested that banks should inject funds wherever necessary to help their subsidiaries grow and become ready for public listing at the right time.

For instance, the country’s largest lender, State Bank of India, may consider listing SBI General Insurance and SBI Payment Services in the future, once these entities have achieved a stronger operational scale. SBI General Insurance Company Ltd, incorporated on February 24, 2009, reported a profit of ₹509 crore for the financial year ending March 2025.

During the same period, the insurance subsidiary issued 3,71,693 equity shares of ₹10 each. As a result, SBI’s shareholding in the company decreased slightly from 69.11% to 68.99%.

SBI Payment Services Pvt Ltd, which focuses on merchant acquiring, is 74% owned by SBI, with the remaining stake held by Hitachi Payment Services. As of March 31, 2024, the company had over 33.10 lakh merchant acceptance points, including 13.67 lakh POS machines deployed across various regions in India.

Canara Bank, on the other hand, has already begun work on taking its asset management joint venture, Canara Robeco AMC, public. It is also preparing to list Canara HSBC Life Insurance Company. The bank has approved a plan to dilute a 14.5% stake in the life insurance joint venture as part of this process.

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