India’s Finance Ministry Urges PSBs to List Subsidiaries and Expand Lending

On June 29, Livemint reported that India’s Finance Minister Nirmala Sitharaman urged public sector banks to list subsidiaries. This aims to unlock value once subsidiaries grow enough to justify market presence. About 15 subsidiaries or joint ventures are under consideration for IPOs or divestments. Banks must improve governance and decision-making within these subsidiaries. Operational efficiency also needs to be enhanced before listings can proceed. The finance ministry sees this as a way to increase capital efficiency in the banking sector.

Banks of India to List Key Subsidiaries

State Bank of India, the country’s largest lender, is considering listing some subsidiaries. SBI General Insurance and SBI Payment Services may be listed after further growth. SBI General Insurance made a profit of ₹509 crore in the year ending March 2025. SBI’s ownership in this subsidiary decreased slightly from 69.11% to 68.99% recently. SBI Payment Services is 74% owned by SBI, with Hitachi Payment Services holding the rest.

Other public sector banks are also pursuing listing plans for their subsidiaries. Canara Bank started the process for Canara Robeco Asset Management Company. It also approved a 14.5% stake sale in Canara HSBC Life Insurance Company. These moves reflect a coordinated effort to unlock value through subsidiary listings. The finance ministry supports these steps to improve sector-wide capital efficiency.

Finance Minister Urges PSBs to Increase Corporate Lending 

As APB reported in an earlier meeting, Finance Minister Sitharaman urged PSBs to increase corporate lending in productive sectors. This comes after RBI Governor Sanjay Malhotra cut the repo rate to 5.5%. The cash reserve ratio was also reduced by 100 basis points recently. These changes are expected to add about ₹2.5 lakh crore liquidity to banks. The increased funds aim to support key sectors like renewable energy and infrastructure.

Finance Minister Calls for Deposit Growth and Expanded Outreach by PSBs

During a meeting, the finance minister stressed the need to boost deposit mobilisation. Public sector banks were asked to expand their reach in semi-urban and rural areas. Banks should use branch networks more effectively for this purpose. Identifying growth sectors for the next decade is also important. Increased participation in GIFT City and the India International Bullion Exchange was encouraged. These measures aim to strengthen public banks’ role in the economy.

Improving customer service and digital accessibility was another key focus in the meeting. Banks must speed up grievance redressal processes significantly. Digital services should be easy to use, multilingual, and accessible to all. Physical branches, especially in cities, need clean and welcoming environments. From July 1, PSBs will join a three-month Financial Inclusion campaign. The campaign targets 2.7 lakh Gram Panchayats and urban local bodies.

Expanding Banking Services in Underserved Regions

The finance ministry also discussed ongoing government-backed financial initiatives. Banks should strengthen the New Credit Assessment Model for MSMEs. Over ₹60,000 crore has been sanctioned to nearly 200,000 businesses under this model. PSBs were reminded to support schemes like PM Jan Dhan Yojana and Kisan Credit Card. Staffing shortages must be addressed quickly, especially in the northeast. Expanding services in underserved regions will improve coverage and service delivery.

The post India’s Finance Ministry Urges PSBs to List Subsidiaries and Expand Lending appeared first on Coinfomania.