National

Centre to decide on diluting stake in PSU banks next month

Arun Jaitley

Arun Jaitley  

more-in

The Finance Ministry road map for bank capitalisation of all PSU banks could entail dilution of Government’s stake

Union Finance Minister Arun Jaitley said on Saturday that the four-year plan for the re-capitalisation of public sector banks is high on priority for the Modi Government

After the current Parliament session ends on August 14, the Centre will take a call on the dilution of Government stake in the State Bank of India (SBI), Financial Services Secretary G S Sandhu said on Saturday. The Finance Ministry will, in the next one month, prepare the road map for raising of capital of all public sector banks which could entail dilution of Government’s ownership of them. The Ministry is assessing the capital requirements of these banks including the State Bank of India, Mr. Sandhu said.

All PSU banks are adequately capitalised as per the Basel III norms at the moment. However, as Mr Jaitley said in his budget speech, by 2018 to be in line with these norms, these banks would cumulatively need additional equity infusion of Rs 2,40,000 crore. The UPA Government’s Interim Budget had allocated Rs 11,200 crore for the current fiscal towards this, which Mr. Jaitley continued.

“While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares ,” Mr. Jaitley said .

The Government owns 58.60 per cent stake in SBI right now. For SBI to raise capital for meeting the Basel III norms, the Government could need to lower its shareholding. Mr. Jaitley said the Government will not dilute its stake below 51 per cent in PSU banks. SBI had raised Rs 8,032 crore in January by selling 5.13 crore shares through a qualified institutional placement. Earlier in 2008, it had raised over Rs 16,000 crore through a rights issue.

Mr. Sandhu also said that the priority for the Finance Ministry is to see through the Bill for raising the Foreign Direct Investment cap in insurance firms to 49 per cent from the 26 per cent, a proposal that is pending since 2008.

Why you should pay for quality journalism - Click to know more

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Jan 28, 2020 7:54:37 AM | https://www.thehindu.com/news/national/centre-to-decide-on-diluting-stake-in-psu-banks-next-month/article6229243.ece

Next Story