According to the Government official, the Finance Ministry is trying to bring down the government’s equity in the Public Sector Banks (PSBs) to 52%, in order to align with the best corporate practices.
Rajiv Kumar, Financial Services Secretary, in an interview to PTI said: “The government is essentially a major shareholder. So, this needs to be aligned with the best corporate practices. The shareholding needs to come down to at least 52 % in the first phase. As and when market condition allows, banks will take step in that direction. They have all the permission in hand.”
The government is planning to divest in the PSBs in order to meet SEBI 25 per cent public float norms as well as to encourage the PSBs to follow the prudential lending norms. Currently the government owns more the 75% in some major PSBs.
Some other banks, such as Union Bank of India, Oriental Bank of Commerce, Syndicate Bank, and Punjab National Bank have already issued or in process of issuing Employee Share Purchase Scheme (ESPS).
Rajiv Kumar also said that the government, besides divestment, is also planning the consolidation of Regional Rural Banks (RRBs) to better serve the needs of rural India. In such process, the government has recently announced the merger of three RRBs namely; Punjab Gramin Bank, Malwa Gramin Bank and Sutlej Gramin Bank into a single RRB with effect from January 1.