1. Govt to reduce holding in PSBs to 52% in a phased manner: Jayant Sinha

Govt to reduce holding in PSBs to 52% in a phased manner: Jayant Sinha

The govt has decided to bring down its holding in PSBs to 52 pct to ensure that capital needs of banks are taken care of...

By: | New Delhi | Published: March 17, 2015 4:46 PM
PSBs, PSU Banks, Jayant Sinha

The government will continue to support PSBs with alternative strategies which will still not be able to raise capital, says Minister of State for Finance Jayant Sinha. (PTI)

The government has decided to bring down its holding in public sector banks (PSBs) to 52 per cent in a phased manner to ensure that capital needs of banks are taken care of, Parliament was informed today.

“The government will continue to support those banks with alternative strategies which will still not be able to raise capital,” Minister of State for Finance Jayant Sinha said in a written reply to the Rajya Sabha.

The government has been using different criteria in different years for infusion of capital in PSBs, he said.

In 2014-15, the criteria of Return on Assets (RoA) and Return on Equity (RoE) was used to encourage banks to be more efficient in their operations so that internal accruals increase.

In a separate response, Sinha said that based on the recommendations of RBI central board, government has approved enlargement of six of the identification mark by 50 per cent and introduction of angular bleed lines in banknotes of Rs 100, 500 and 1,000 denominations.

Replying to another question, Sinha said, the World Bank estimates that remittances to Bangladesh from its migrant workers in India in 2013 was USD 6.62 billion.

This is 0.36 per cent of India’s GDP, he added.

Remittance from one country to another is a normal economic activity, he said, adding that India is the world’s largest recipient of remittances and was estimated to have received USD 71 billion in 2014, as per the World Bank database.

  1. M
    Mangoman
    Mar 18, 2015 at 9:49 pm
    Couple of observations; this is a govt. of flip-flops! Few days ago it said all PSBs will be brought under a holding company, which will give the weaker banks some headroom! Banks are the most strategic component of the economy because the total monetary-policy transmission depends on the banking sector!! Govt. must not dilute its stake beyond 24%; i.e. 76% should be held by the govt. Besides, we have already seen SBI tops the list of customer complaints among govt. banks though its NPA levels are higher than private-sector banks. The reason is simple; credit managers of SBI are corrupt to the core and give advances worth thousands of crores to big businesses/politicians, which can not be recovered!! Then they brazenly manite small borrowers by adding rampant charges on customer accounts to "window-dress" their balance-sheets; it's easier to har a small-borrower by sending collection agents , which will not work for bigger companies. Private-sector banks like ICICI and HDFC Bank follow this method to pad-up their NIMs (net interest margins). The govt. should impose hefty penalties on erring banks to protect small consumers like they do in US and UK...every year they collect hundreds of billions of dollars from banks alone for fradulent trade practices!! In India, the regulatory regime is a complete mockery when it comes to customer protection!! Banks are let-off with warnings (WTF!!) or small fines of a few thousand/lakh rupees, which they recover from gullible customers before the ink dries up!! If banks can successfully arm-twist educated, knowledgeable and resourceful urban clients, then one can well imagine what the poor, uneducated public goes through in semi-urban/rural areas!! SBI is a rogue-bank and its behaviour can be attributed to its ociation with US-based GE Capital. SBI mastered the are of fraud first in its credit-card business (where it collaborated with GE Cap) and then slowly replicated it across all verticals!! The govt. must impose stringent penalties running into tens/hundreds of crores to control such bad behaviour by banks, both private and public!! The govt. has social responsibilities and it's job is not to pursue profit indiscriminately!! If at all the govt decides to dilute its stake, it must restrict insutional partition (domestic and foreign) to 10%, rest 38% will be held by small, retail investors!!
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