With the RBI raising concerns over the issuance of zero-coupon bonds for recapitalisation of public sector banks (PSBs), the Finance Ministry is examining other avenues for affordable capital infusion, including setting up of a Bank Investment Company (BIC), sources said.
Setting up a BIC as a holding company or a core investment company was suggested by the P.J. Nayak Committee in its report on ‘Governance of Boards of Banks in India’.
The report recommended transferring shares of the government in the banks to the BIC which would become the parent holding company of all these banks; as a result of this, all the PSBs would become ‘limited’ banks.
