International Development News
Development News Edition

FM directs PSU banks to reduce govt equity to 52 pct for best corporate practices


FM directs PSU banks to reduce govt equity to 52 pct for best corporate practices
The country's largest lender State Bank of India (SBI) has already initiated step for Rs 20,000 crore share sale through qualified institutional placement (QIP). (Image Credit: Flickr)

In a bid to align with the best corporate practices, the Finance Ministry has asked the public sector banks to gradually bring down the government's equity to 52 per cent, a top official said. "The government is essentially a major shareholder. So, this needs to be aligned with the best corporate practices. The shareholding needs to come down to at least 52 per cent in the first phase. As and when market condition allows, banks will take the step in that direction. They have all the permission in hand," Financial Services Secretary Rajiv Kumar told PTI.

Dilution of government stake will help banks to meet 25 per cent public float norms of market regulator Sebi. Some of the public sector banks have government's holding beyond 75 per cent. Besides, it will encourage the banks to follow the prudential lending norms.

The country's largest lender State Bank of India (SBI) has already initiated step for Rs 20,000 crore share sale through qualified institutional placement (QIP). Post QIP, the government stake will be diluted from the existing 58.53 per cent. Last month, shareholders of the bank approved the sale of shares to fund the business growth. Many other banks are planning to raise capital through some means or other, depending on the market condition.

Some of the lenders like Syndicate Bank, Union Bank of India, Punjab National Bank, and Oriental Bank of Commerce among others have already issued or in process of issuing Employee Share Purchase Scheme (ESPS). He further said the government has also initiated the process for consolidation of Regional Rural Banks (RRBs) to better serve the needs of rural India. Recently, the Centre has amalgamated three RRBs -- Punjab Gramin Bank, Malwa Gramin Bank and Sutlej Gramin Bank -- into a single RRB with effect from January 1.

The central government, after consulting the sponsor banks of the three RRBs, felt that in the interest of the banks and the areas served by them, they should be amalgamated into a single RRB. Besides, Punjab Gramin Bank (PNB), and Uttar Bihar Gramin Bank (UCO Bank) has been amalgamated with Madhya Bihar Gramin Bank (PNB). While the consolidated RRB in Punjab is called Punjab Gramin Bank, with headquarters at Kapurthala, the one in Bihar has been rechristened as Dakshin Bihar Gramin (based in Patna).

These banks were formed under the RRB Act, 1976 with an objective to provide credit and other facilities to small farmers, agricultural labourers and artisans in rural areas. Currently, the Centre holds 50 per cent in RRBs, while 35 per cent and 15 per cent are with the concerned sponsor banks and state governments, respectively.

(With inputs from agencies.)


TRENDING

OPINION/BLOG/INTERVIEW

'No escape from telephones', this 1953 prediction actually comes true

In 1953, a telephone company chief predicted that therell be no escape from telephones in the future....

With Ayodhya verdict, CJI starts clearing high profile pending cases

Ending all the speculations, the Chief Justice of India Mr. Ranjan Gogoi who is due to retire on November 17 decided to deliver the verdict in Ayodya dispute at 10.30 am on Saturday which is not a working day for the Supreme Court. This is ...

How partnerships and collaborations could enhance teacher training

Monica Malhotra Kandhari, Managing Director, MBD Group shares her views on public private partnership and collaborations in education sector. She supports her propositions with her organisations success stories....

Fixed Test centers would facelift level of WTC in India

The venues for the test matches in India should be fixed so that World Test Championship matches remain fair....

Videos

Latest News

TN trounces Vidarbha, emerges group topper

Tamil Nadu thrashed Vidarbha by 113 runs on Sunday in a Group B match of the Syed Mushtaq Ali Trophy T20 cricket tournament here to advance to the super league stage as the group topper. Three teams-Rajasthan, Vidarbha and Kerala- finished...

Indian man arrested for illegally carrying USD 25,000 in Nepal airport

An Indian national has been arrested from Tribhuvan International Airport here for illegally possessing huge amount of foreign currency. Satyanarayan Ramacharya, 35, was held when he was about to board a Dubai-bound Oman Air flight on Satur...

UPDATE 3-Saudi Aramco in race for IPO record with $1.7 trillion top value

Saudi Aramco is worth up to 1.7 trillion at the price range set by the oil giant on Sunday, below the 2 trillion sought by Saudis crown prince but putting it in the running to become the worlds biggest IPO.Aramco cannot sell its shares dire...

UPDATE 7-Hong Kong campus protesters fire arrows as unrest spreads across Kowloon

Hong Kong protesters shot bows and arrows and hurled petrol bombs from a barricaded university on Sunday and police fired volleys of tear gas and blue liquid from water cannon as unrest spread across the Kowloon peninsula. Several protester...

Give Feedback