After finance ministry, it’s Reserve Bank of India (RBI) who is advocating the privatization of Public Sector Banks in India. In a meeting with Prime Minister through video conferencing, the RBI governor has requested for selling government stakes in PSBs to 26%. At present, the Centre’s stake in public sector banks goes beyond 50 per cent.
“Bringing down the government’s stake in public sector banks to allow them to be run more professionally was one of the things discussed,” a person with knowledge of the matter told ET. Plus, he mentioned that it was recommended that the Centre should retain major control over the state-run banks. It might need fresh legislation to reduce the government stake to 26 per cent.
Chiefs of the central bank, Shaktikanta Das, Securities & Exchange Board of India (Sebi), Ajay Tyagi, and Insurance Regulatory & Development Authority of India (Irda), SC Khuntia, discussed the matter with the Prime Minister via video-conferencing on Thursday.
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The Reserve Bank of India (RBI) also requested for providing the longer tenure to MD & CEOs of the banks in order to manage these financial organisations in a more professional manner, and the banking regulator suggested these measures in a presentation to Prime Minister Narendra Modi.
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Amid a disruption caused by the Covid-19 pandemic, in a meeting with top bankers, PM Modi had asked the country’ top lenders to fund bankable proposals, undeterred by the toxic loans generated in the past, and pledged to fully back the executives.
