RBI leaves equity ownership of Nabard, NHB

Concludes transfer of entire stake to GoI for Rs1470 cr

MUMBAI: The RBI has sold its remaining one per cent stake in National Bank for Agriculture and Rural Development (Nabard) and the entire holding in National Housing Bank (NHB) to the Government of India leaving it the sole owner of these two institutions.

The current change in the capital structure of both the financial institutions was brought in by the Government of India through amendments to the Nabard Act, 1981 and the NHB Act, 1987, which were notified vide gazette notifications on January 19, 2018 and March 29, 2018 respectively

While RBI sold its remaining one per cent it held in Nabard to Government of India for Rs20 crore, the entire 100 per cent ownership in NHB was sold for Rs1450 crore to the Government.

In fact, RBI used to hold 72.5 per cent stake in Nabard until October 2010 when it divested 71.5 per cent bringing down its ownership to a nominal one per cent. And this one per cent was sold to the Government of India on February 26, 2019.

In the case of NHB, the Reserve Bank concluded its 100 per cent divestment on March 19, 2019 for a value of Rs1450 crore.

Divestment of RBI’s stake in Nabard and NHB has its basis in the recommendation of Narasimham Committee II and the Discussion Paper prepared by RBI on Harmonizing the Role and Operations of Development Financials Institutions and Banks.

Based on the recommendation, RBI announced the proposal to transfer ownership of its shares in SBI, NHB and NABARD to the Central Government in the Monetary and Credit Policy for the year 2001-02.

The Narasimham panel had said that RBI could not own those entities as they are regulated by it. The Nabard came into existence on July 12, 1982 by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation.

The decision to establish NHB was announced in the 1987-88 Budget. Following that, the National Housing Bank Bill, providing a legislative framework for the NHB, was passed by Parliament in the Winter session of 1987 and it became an Act on December 23, 1987.









Leave a Reply

Your email address will not be published. Required fields are marked *