The finance ministry has made it clear that it intends to go ahead with the move to make voting rights in private sector banks in line with the actual shareholding. At the same time, it has no plans to extend these changes to public sector banks.
?The planned amendments to the Banking Regulation Act will not impact the ceiling on voting rights in public sector banks as there is no proposal to alter such ceiling provided in the Acts administering them,? the ministry said in a statement issued on Sunday.
The ministry came out with the unusual statement on a public holiday as a section of the banking employees, under the banner of United Forum of Bank Unions, has called for a two-day strike on September 24 and 25. ?The amendment is necessary to give shareholders of private sector banks voting rights commensurate with the equity held by them. This is in accordance with the best international practices,? the release explained.
For public sector banks, the statutory ceiling on voting rights is retained at 10% in the case of the State Bank of India and its subsidiaries and 1% in the case of other nationalised banks. The ministry said the strike was ?uncalled for and unjustified?. It also said the Raghuram Rajan and the Anwarul Hoda committee reports on development of financial services are currently under discussion. Both these committees have asked for clipping government holding in public sector banks. But the statement reiterated that the government ?does not propose to transfer control and management of public sector banks to the private sector.
Government will hold not less than 51% of the equity in the public sector banks and their public sector character will be preserved.? Almost 70% of banks in India is in the public sector.
Regarding the merger of public sector banks with each other, the finance ministry explained that government has no such proposals with it now.
Initiatives for merger of such banks will have to come from the management of the banks and ?no specific directions in this connection have been issued by the government or the RBI. It has been only emphasised that the process of consolidation is necessary to improve the state of competitiveness of Indian banks globally,? the statement said.
The ministry stated the strike in public sector banks was counterproductive, as ?it will only drive more customers to deal with private sector banks, jeopardising the interests of public sector banks. Government, therefore, expects and hopes that the UFBU will call off the proposed strike?, it said.