Finance minister P Chidambaram on Tuesday ruled out lowering government stake in public sector banks to below 51% and said that there was no uncontrolled inflow of foreign capital into the Indian banking sector.
?The NDA government had announced reducing government equity in public sector banks to 33%. When we came to power, I made it clear that it will not be reduced to below 51%. That stands. We have no proposal to reduce government equity to below 51%,?he told the Rajya Sabha.
?There is no proposal under consideration to amend the statutory or other provisions for enabling government to bring down its shareholding in public sector banks (other than associate banks of the State Bank of India where government has no shareholding) to below 51%,? Chidambaram said.
Prime Minister?s economic advisory council chairman C Rangarajan had suggested that government might have to either bring in additional capital in public sector banks or reduce its share to below 51% to ensure rapid growth of PSU banks.
?RBI guidelines on Tier-I capital are being strictly followed by banks,? he said. ?Our policy is that we will ensure adequate capital strictly in accordance with Basel-II norms,? he added.
On the surge in foreign capital inflow, he said, ?There is no uncontrolled inflow (of foreign funds) into the banking sector.? The RBI has laid strict guidelines including a cap on FII and individual investments at 20 and 5% respectively, the minister said.
?All this, of course, is good if we can absorb and turn it into productive investment,? he said.
