The central government is considering halving the minimum stake in public sector banks in the wake of the ongoing strike against privatization. The law could be amended to reduce the central minimum shareholding in public sector banks from 51 per cent to 26 per cent. The government retains the right of appointment in the management of the bank after the reduction of the stake.
Bank employees protested
– Photo: Amar Ujala
Listen to the news
The path to privatization will be easier, without parliamentary approval, even foreign investors will be able to buy more shares
The Bloomberg government continues to propose changes to the Banking Regulation Act. Under this, it will reduce its stake in banks from 51 per cent to 26 per cent. If these proposals are approved, the path of privatization of public sector banks will be facilitated. Also, it will allow foreign investors to buy more and more shares in these banks without the approval of Parliament.
By law, however, there is a stipulation that the government retain the right of appointment in management. The talks are at an early stage and will be discussed by the Union Cabinet before it is tabled in Parliament. The purpose of this change is to reduce the burden of increasing NPAs on banks and to increase the inflow of capital into the economy.