Divest stakes in banks: Planning Comm to Govt
April 5th, 2008 | by admin |New Delhi, April 2: In a significant move for the banking sector, the Planning Commission on Wednesday asked the government to reduce its stake in the public sector banks to 33 per cent from the present level of around 70 per cent.
At present, the government has a policy to keep at least 51 per cent majority stake in the public sector banks. “In the medium term, the ability of these banks (public sector) to raise capital for growth without reducing the government shareholding to less than 51 percent will be severely constrained,” a report of Planning Commission’s High Level Group on service sector said.
The Group headed by Planning Commission member Anwarul
Hoda, which was constituted last year, submitted its report to Prime Minister Manmohan Singh on Wednesday.
The Planning Commission panel also suggested permitting foreign investors to own larger share in insurance Companies, detariffing of insurance products subject to appropriate regulation, uniform stamp duty for the debt and security Markets and reforms in the pension sector.
The Panel noted that certain key recommendations of the Narasimham Committee on banking reforms remain unimplemented.
“The Narasimham Committee had recommended that the minimum government ownership in these banks be reduced to 33 per cent and the banks should become board-managed Companies,” it said.
A sub-group of Financial Services, in which ICICI Bank MD and CEO K V Kamath and HDFC Bank MD Aditya Puri were also a
member, contributed to this report.
