Several public sector banks are gearing up to list their subsidiaries, a move that would help them bolster their financial health. Sources said PNB Housing Finance and SBI Cards and Payment Services-- the credit cards division of State Bank of India among others may be the first to hit the market.
PNB Housing Finance, a subsidiary of Punjab National Bank, is a joint venture between the state owned bank and Carlyle Group, a global investment firm.,
While the parent lenders are likely to take longer to hit the market due to their bleeding balance sheets, their subsidiaries, most of which are in joint ventures with the private sector, could get listed within one year.
“The subsidiaries of the government banks are doing significantly better than the parent companies and it is a good idea to go ahead and list them which will boost transparency and even improve the finances,” a senior government official, who did not wish to be identified told Hindustan Times.
The roadmap by each bank will be unique.
“They will have their own timing and their own unique plan and most of these subsidiaries are run on PPP (public private partnership) model..most of these are doing well ,” the official said. Several banks also have insurance businesses under them.
The going for the government banks has been tough in the last couple of years with mounting non performing assets (NPA)—loans that turn unproductive. The gross NPAs of government banks, which was 5.43% as on March 2015, went up to 7.30% in December 2015.
The gross non performing assets for state owned banks increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015. This is a rise of Rs 94,666 crore over nine months in 2015-16, according to official data.