RBI sells Nabard stake to govt for Rs 1,450 cr
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The Reserve Bank of India (RBI) has divested 71.5 per cent stake amounting to Rs 1,430 crore in National Bank for Agriculture and Rural Development (NABARD) in favour of the government. With this, the Reserve Bank's holding in Nabard has come down to one per cent of Nabard capital. The government now holds 99 per cent of the stake.
The RBI held 72.5 per cent of equity in Nabard amounting to Rs 1450 crore. The remaining shareholding of Rs 550 crore was with the government. The Union Cabinet in May 2008 approved the Reserve Bank's proposal to transfer its share holding in Nabard to the Government of India.
Accordingly, the Government of India issued a notification on September 16, 2010 prescribing the proportion of subscription/ ownership of the government and RBI in Nabard as 99 per cent and 1 per cent respectively. "The transfer of 71.5 per cent shareholding of the RBI amounting to Rs 1430 crore in Nabard has been effected on October 13. Now the Reserve Bank holds one per cent of shareholding in Nabard and the government 99 per cent," the RBI said.
"The government has followed it through the recommendation which was made in the report of Narasimhan committee. The idea, as per the Narasimhan panel report, was that the regulator should not be the owner of such institutions. However, the nature of our institution's functioning will remain unchanged even after this divestment," Nabard chairman UC Sarangi said. For buying stake of RBI in Nabard and NHB, the Government had earlier this year, provided for Rs 1,900 crore in the first supplementary demand for grants.
The move comes more than three years after the Reserve Bank sold its 59.73 per cent stake in the country's largest lender State Bank of India to the government for over Rs 35,531 crore. Now the only major institution where RBI holds a stake is National Housing Bank (NHB). The central bank holds 100 per cent stake in the housing finance regulator. The buying of stake in these institutions would enable the government to have greater say in the board of these institutions.