"I think it (stake dilution in public sector banks) is more likely to happen in tranches based on the requirement of funds. We will go to the Cabinet. We will take a nod from them. This is the way we want to go ahead," Financial Services Secretary G S Sandhu said after meeting of heads of state- owned banks here.
Government shareholding in various banks varies between 56.26 per cent to 88.63 per cent.
"It will be a combination of follow-on public offer (FPO) and in some cases it will be QIP...it may start around Diwali time...most likely November," he said.
Sandhu further said that the budget allocation for recapitalisation of public sector banks of Rs 11,200 crore would not be enhanced.
"Budgetary amount is not required to rise because now we will be raising money in the market. So the budgetary amount is same, Rs 11,200 that is not to be raised," he said.
Asked if banks like State Bank of India and Punjab National Bank would go in for fund raising through public offer this fiscal, he said that "they do require money this year, so that is very much possible. They may be".
SBI is country's largest bank and government holds 58.60 per cent stake. PNB is the second largest PSU bank, in which government holding is 58.87 per cent.
When asked if you will start with big ones, the Secretary said: "One which require the money most."
Finance Minister Arun Jaitley in the Budget speech had said that "to be in line with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation."
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 largely through retail to common citizens of this country, the minister had said.
"Thus, while the government will continue to have majority shareholding, the citizens of India will also get direct shareholding in these banks, which currently they hold indirectly," he had said.