SBI Chairman Dinesh Kumar Khara has mentioned that the State Bank of India (SBI) will wait for its subsidiaries, such as SBI General Insurance and SBI Payment, to further scale up their operations before considering monetizing them. This approach aims to increase the valuation of these subsidiaries and ensure better returns for the parent company, SBI. In an interview with PTI, Khara stated that the monetization of these subsidiaries would likely be through the capital market.
According to Khara, the subsidiaries eligible for this route would primarily be SBI General Insurance and potentially SBI Payment Services in the future. However, there are currently no specific plans for monetization in the current financial year. Khara emphasized the importance of scaling up these subsidiaries before considering approaching the capital market to monetize SBI’s holdings in these companies.
During the fiscal year that ended on March 31, 2024, SBI infused an additional capital of Rs 489.67 crore in SBI General Insurance Company Ltd. This resulted in a decrease in the bank’s stake from 69.95% to 69.11%. SBI General Insurance reported a 30.4% increase in net profit to Rs 240 crore for the financial year that ended in March 2024, compared to Rs 184 crore in the previous year.
SBI Payment Services Pvt Ltd, which is involved in the Merchant Acquiring Business, is 74% owned by SBI, with the remaining 26% owned by Hitachi Payment Services. As of March 31, 2024, SBI Payments had over 3.310 million Merchant Payment Acceptance Touch Points, including 1.367 million POS machines deployed across different regions. However, the company’s net profit declined to Rs 144.36 crore for the year ended March 2024, compared to Rs 159.34 crore in the previous year.
Khara also mentioned the growing demand for credit from the corporate sector, with loans worth Rs 5 trillion in the pipeline. He noted that unlike the past few years when corporates had sufficient cash surplus, they are now seeking credit to fund working capital requirements and capacity expansion. This shift in behavior indicates that corporates are approaching banks for additional funding. Khara expressed confidence in SBI’s ability to create value for the private sector, given the healthy pipeline of new proposals amounting to approximately Rs 5 trillion.