Govt plans to cut stake in PSBs to 52%; may get Rs 89,120 cr

There are about two dozen PSBs and government holding in them is between 56.26% and 88.63%

The government is planning to bring down its stake in public sector banks to 52 per cent, which can fetch the exchequer Rs 89,120 crore.

Minister of State for Finance Jayant Sinha told the Lok Sabha the government is "considering" to bring down its equity in the state-owned banks as it would reduce budgetary requirement for capitalisation of public sector banks (PSBs).

"The step would substantially reduce the requirement of budgetary provision for infusion of capital in public sector banks," he said in a written reply.

Sinha further said "the reduction of government share in equity capital of PSBs to 52 per cent will enable mobilisation of Rs 89,120 crore approx on the basis of current market price on November 21".

There are about two dozen PSBs and government holding in them is between 56.26 per cent and 88.63 per cent.

The government has infused an amount of Rs 58,600 crore since 2011 in these PSBs.

Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet Basel III norms. For the current fiscal, the government has allocated Rs 11,200 crore for bank capitalisation.

As per existing law, government holding in PSBs cannot fall below 51 per cent.