Perhaps the government of India has decided to endorse the decision of SBI which aims to set up a financial holding company in the country. It is to be mentioned here that the holding company of the bank will help SBI to raise capital and the money will be then used to expand the business of the subsidiaries.

According a board member working with the state-run banking giant, the model of the holding company will help SBI to raise capital for expanding the business activities of its subsidiaries.

It may be noted here that the company is aiming to pump in money into the private equity, reinsurance, mezzanine financing and credit enhancement business with the money that is aimed to be raised. Moreover, the bank may also look at the option of pumping in money to the insurance business as well.

R Gopalan, secretary, department of financial services, finance ministry said that the government will take a call on the issue after the RBI will release its discussion paper on the holding companies in the banking sector.

For the record, the government is the largest shareholder in the banking giant with a 59% stake.