In a bid to unlock value and improve capital efficiency, the Finance Ministry has directed public sector banks (PSBs) to consider monetising their investments in subsidiaries and joint ventures by listing them on stock exchanges after scaling up operations. The move aims to ensure PSBs realise better returns from their holdings through strategic disinvestment over the medium to long term.
As per reports, nearly 15 subsidiaries and joint ventures of PSBs are being evaluated for potential initial public offerings (IPOs) or stake dilution in the coming years. Banks have been advised to invest additional capital, where needed, to enhance the operational scale and market competitiveness of these entities before taking them public.
“PSBs must improve governance, adopt professional decision-making practices, and bring in operational efficiencies in their subsidiaries as a precursor to monetisation,” sources said.
Among the potential candidates, State Bank of India (SBI) — the country’s largest lender — is expected to consider the listing of SBI General Insurance and SBI Payment Services once these businesses achieve greater scale.
SBI General Insurance, which was incorporated in 2009, posted a net profit of Rs 509 crore for the financial year ended March 2025. During the year, the company allotted 3.71 lakh equity shares, slightly reducing SBI’s stake from 69.11 per cent to 68.99 per cent.
Meanwhile, SBI Payment Services Pvt Ltd, a joint venture with Hitachi Payment Services, is another strong candidate for monetisation. SBI holds a 74 per cent stake, and the company has established itself as one of India’s leading merchant acquirers, with over 33.10 lakh payment acceptance touchpoints, including 13.67 lakh point-of-sale (POS) terminals as of March 31, 2024.
Canara Bank has already begun preparations for the listing of its asset management joint venture, Canara Robeco Asset Management Company (AMC). In addition, the bank is also progressing towards listing its life insurance arm, Canara HSBC Life Insurance Company.
The bank has approved the dilution of a 14.5 per cent stake stake in the life insurance JV as part of the monetisation plan.
This initiative is part of a broader government strategy to deepen capital markets, boost transparency, and enhance the commercial value of public sector entities. IPOs of mature and high-growth subsidiaries could also offer new investment opportunities to retail and institutional investors.
The listings are expected to be timed with market conditions and may unfold between FY26 and FY28, depending on regulatory approvals and business performance.