Disinvestment in PSBs in phased manner under consideration: Arun Jaitely

New Delhi: With an aim to help public sector banks raise capital, government is considering to reduce its stake up to 52 per cent in a phased manner in these banks, said Finance Minister Arun Jaitely. "A proposal for allowing pubic sector banks (PSBs) to raise capital from public market by diluting Government of India holding up to 52 per cent in phased manner is under consideration," Jaitley said in written reply in the Rajya  Sabha.    

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 to 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. Replying to another question, Minister of State for Finance Jayant Sinha said that total amount of Gross Non Performing Assets (NPAs) stands at over Rs 1.64 lakh crore for nationalised banks and over Rs 2.43 lakh crore for publicsector banks at end-September 2014. He further said amount of top 30 NPAs is Rs 87,368 crore, 35.9 per cent of total Gross NPAs of PSBs.