New Delhi, Feb. 1: The government has decided to acquire the stake of the Reserve Bank of India (RBI) in State Bank of India, in a cash-less transaction aimed at separating the ownership and regulatory functions of the RBI.

“Following the recommendation of the Narsimhan committee, the Union cabinet has approved the proposal to transfer the RBI stake in SBI, Nabard and NHB (National Housing Bank) to the government in a cashless transaction,” finance minister P Chidambaram said after the Cabinet meeting.

The committee had recommended that being a regulator of the banking sector, the RBI should not have an ownership in any commercial bank.

The government will acquire RBI’s 59.73 per cent stake in SBI, the country’s largest commercial bank, by June 2007. The value of the stake is estimated at Rs 40,000 crore based on the current stock market price of SBI of Rs 1,300 per share.

However, since RBI is also a government institution, it will pay back to the government whatever it gets for the transfer of its stake in SBI as well as in Nabard and NHB.

“It will be a book entry transaction, as whatever I pay to RBI, I will get back,” Chidambaram said.