New Delhi: In a strategic move to unlock greater value from government-owned financial institutions, the Ministry of Finance has urged public sector banks (PSBs) to monetise their investments in subsidiaries and joint ventures by listing them on the stock exchanges. The decision is part of a broader policy aimed at improving capital efficiency, ensuring better returns on investments, and instilling greater professionalism and transparency within these entities.
According to the official communication and sources familiar with the matter, nearly 15 subsidiary companies under various PSBs have been identified as potential candidates for monetisation through public offerings or phased divestment. The Finance Ministry has advised these banks to prepare their subsidiaries by scaling up business operations and improving their financial performance to make them attractive for listing on the bourses. The idea is to tap the capital markets when conditions are favourable, ensuring that both valuations and investor sentiment are optimally aligned.
In order to ensure the success of this monetisation drive, the Ministry is also pushing for reforms in the governance structure of the subsidiaries. This includes enhancing operational autonomy, introducing stricter key performance indicators (KPIs), and improving the overall accountability of management teams. The focus is on building sustainable and scalable businesses that can thrive independently in the competitive marketplace. By doing so, the government aims to not only enhance shareholder value but also make these institutions more robust in the long term.
One of the notable examples in this initiative is the State Bank of India (SBI), which is reportedly considering the market listing of two of its subsidiaries SBI General Insurance and SBI Payment Services. SBI General Insurance, founded in 2009, has demonstrated strong financial performance, posting a profit of ₹509 crore in FY 2024–25. SBI Payment Services, which operates a vast network of over 33 lakh merchant outlets and nearly 14 lakh point-of-sale (POS) terminals, is among the leading players in India’s digital payment ecosystem. The listing of such subsidiaries could significantly bolster SBI’s capital position and bring greater visibility to these high-potential segments.
Similarly, Canara Bank is taking active steps toward this monetisation goal. The bank is currently in the process of listing its asset management joint venture, Canara Robeco AMC. Additionally, it is preparing to reduce its 14.5 percent stake in Canara HSBC Life Insurance through an upcoming IPO. These moves are expected to help the bank unlock capital and redeploy resources in its core banking operations, while also allowing the subsidiaries to grow with enhanced market discipline and investor scrutiny.
This policy initiative aligns with the government’s long-term objective of reducing its direct role in non-core sectors while encouraging PSBs to optimise their capital structures. Listing subsidiaries not only provides fresh avenues for capital generation but also fosters greater efficiency, innovation, and public accountability. Moreover, it reflects a shift in strategy where PSBs are expected to function not merely as instruments of public policy but as commercially competitive entities operating with global standards of governance.
As the plan progresses, market analysts will be keeping a close watch on how investor sentiment responds to these listings, what valuations are achieved, and how effectively these reforms translate into improved financial health for the PSBs. If implemented successfully, this could mark a new era in public sector banking in India driven by monetisation, modernisation, and market discipline.