Public Sector Banks Eye IPOs of Subsidiaries and Strategic Divestments

Public sector banks (PSBs) in India are preparing to unlock value from their subsidiaries by exploring initial public offerings (IPOs) and strategic divestments, as per PTI news reports. Government directives encourage banks to scale operations and professionalise these units beforehand, ensuring higher returns through enhanced valuations at the time of listing.

PSBs Prepare for Subsidiary Listings and Stake Dilution

The finance ministry has urged PSBs to monetise holdings in their subsidiaries or joint ventures by taking them public once they demonstrate operational readiness. As per reports, nearly 15 subsidiaries are currently being considered for IPOs or divestment in the medium to long term. These include a mix of financial, insurance, and payment service entities.

To support this effort, banks have been advised to improve governance, introduce professional decision-making, and focus on operational efficiency within their subsidiaries. The move is part of a broader strategy to unlock hidden value and improve financial health across the public sector banking ecosystem.

SBI Leads With Plans for General Insurance and Payment Units

Among the leading names, State Bank of India may bring IPOs for SBI General Insurance and SBI Payment Services in the future. SBI General Insurance, incorporated in February 2009, reported a profit of ₹509 crore in FY 2025. The bank’s stake slightly reduced during the year to 68.99% due to equity allotment.

SBI Payment Services, operating in the merchant acquiring space, is another potential candidate. With over 33.10 lakh merchant payment touch points, including 13.67 lakh POS machines, this unit has scaled significantly. SBI holds 74% stake while the remainder is owned by Hitachi Payment Services.

Read More: SBI Eyes Debt Fundraising Initiative by August Through a Tier II Bond Issue!

Canara Bank Advances with Robeco AMC and Life Insurance Ventures

Canara Bank is further ahead with its plans. The bank has begun preparations for the IPO of Canara Robeco Asset Management Company. In addition, it is initiating listing plans for Canara HSBC Life Insurance, where it has approved dilution of a 14.5% stake. Both ventures are expected to garner strong investor interest, considering their consistent performance in their respective sectors.

Strategic Shift in Monetisation Policy

The push for IPOs and divestments aligns with India’s larger goal of enhancing public asset utilisation and boosting market participation of government-owned enterprises. By listing successful subsidiaries, banks not only raise capital but also instil transparency in operations, appealing to both retail and institutional investors.

Conclusion

With around 15 PSB subsidiaries targeting public listings or stake sales, the coming years could see heightened activity in the IPO market. By focusing on scaling, governance, and monetisation, public sector banks aim to realise better value and improve long-term financial sustainability.

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