Govt May Cut Stakes Up To 52% From PSB’s

Indian government allowed the dilution of government equity in public sector banks (PSBs) up to 52 per cent, enabling them to raise up to Rs 1.6 lakh-crore from markets.

This would enable these banks to partly meet Basel III requirements by March 31, 2019. The amendments are likely to come up in the ongoing session of Parliament.

If the PSBs are permitted to bring down government holding to 52 per cent in a phased manner, they can raise up to Rs 1,60,825 crore from the market, said an official statement, issued after the Cabinet meeting.

This means that the government would require to give almost Rs 79,000 crore (for common tier-I equity) during 2015-19, which will maintain its holding at 52 per cent.

However, as the government is likely to receive an amount of Rs 34,500 crore from PSBs as dividend, the net outgo will only be Rs 44,395 crore.