The government on Saturday made it clear that any decision to undertake a stake sale in public sector banks will be so for an ‘appropriate valuation’. “It is our responsibility to ensure that if we’re going to dilute our stake, which is the stake of the people of India, we’ll do it at an appropriate valuation. We’re certainly not going to do it at a valuation that will result in too much dilution for the people of India,” minister of state for finance Jayant Sinha said on the sidelines of Gyan Sangam.
He, however, declined to give a timeline for the stake sale, even though the Union Cabinet recently decided to reduce government stake in 27 PSBs down till 52%.
“We’re absolutely vigilant on that matter. We completely understand how markets operate, how valuations are set and we’ll take all of that into account when we take decisions, when we dilute our stake,” Sinha said.
The government has a R11,200 crore capital infusion budget for the current fiscal and speculation is on if the government will exceed this given the needs of the banks.
“The government is fully committed to supporting and providing all of our financial institutions, whether they are banks, insurance companies, NBFCs, with the capital that they need to be able to provide the liquidity and the credit to the economy which needs to grow,” he said. The lower credit pick-up this fiscal—the year to date credit growth is at 5.2%—has helped the banks conserve capital.
Sinha exuded confidence that credit offtake will go up in the next few months. “As the economy turns as the interest rates come down, as they will certainly happen in the next few months, I am very hopeful and I am very sure that credit off-take will increase,” he said.
Commenting on the outcome of the Gyan Sangam, he said the expectation is that various groups that have gathered here will provide a series of recommendations. “We have asked for them to be bold, innovative and great in their scope. We will receive these recommendations from the six working groups here and then the government will take a call on when it will be practical to implement them,” he said.
With agency inputs