Recapitalisation of PSU banks is on high priority: Arun Jaitley

New Delhi: Finance Minister, Arun Jaitley said recapitalisation to the tune of Rs 2.4 lakh crore  in public sector banks to meet Basel III norms is a 'high priority' item for the government.  "We suggested proposal for recapitalising of publi sector banks over the next four years...the government is also treating this as a very high priority item," he said at an   event organised by Canara Bank here.   He said the banks would raise the capital without   diluting public sector characteristics in them. So, the government stake in the banks would remain over 51 per cent.  

"While the government will have majority stake, we will   allow the public to invest directly in these banks," he said, adding this will help banks to expand and thereby increase the   whole process of financial inclusion. 

This programme has to be rapidly expanded so that the   remaining 42 per cent of financially excluded population is   brought into the banking system.   At present, 58 per cent of the population has bank account.  Jaitley in the Budget speech had said, "Financial   stability is the foundation of rapid recovery. Our banking   system needs to be further strengthened. To be in line with   Basel-III norms, there is a requirement to infuse Rs 2,40,000   crore as equity by 2018 in our banks.

To meet this huge   capital requirement, we need to raise additional resources to   fulfil this obligation."   While maintaining the public ownership, the capital of   these banks will be raised by increasing the public   shareholdings in a phased manner through sale of shares   largely via retail to common citizens of this country, he   had said.  "Thus, while the government will continue to have  majority shareholding, the citizens of India will also get   direct shareholding in these banks, which currently they hold   indirectly. We will also examine the proposal to give greater   autonomy to the banks while making them accountable," he had said.