When most of the public sector banks are bleeding, and their combined market capitalisation has fallen below private sector peer HDFC Bank, Union Finance Minister Arun Jaitley is set to announce a series of reforms in the banking sector, including reducing the government’s holding in these banks to 51 per cent.
“There are a series of banking reforms which I am likely to announce...in the days to come…,” he said at CNN Asia Business Forum 2016 at the Make in India Week here on Sunday, without elaborating on the reforms as he is set to announce his third Union budget on February 29.
When told that it was time for the government to get out of the banking sector, Mr. Jaitley said: “I don’t think India has reached a state where India can pull out of the banking all together. If you see the last 3-4 decades, state-owned banks have played an important role as they reached out to areas where there was no banking. Just 20 months ago, when this government took over, we still had a situation in which only 58 per cent of India was connected to banks and 42 per cent of Indians had no bank accounts. Therefore, these banks have an important role to play in financial inclusion and geographical reach.” He said the government should not interfere in the functioning of banks.
“The government is committed to zero interference and letting the institutions run professionally and the boards of the banks have to be professionalised. The banks have to work on banking considerations, and this government is particular about the fact that banks must be allowed to do so, and you may need various reforms, including reducing the government equity,” he said.
