Finance Minister Pranab Mukherjee on Sunday said the government would continue to hold majority stake in public sector banks, even as it disinvests in public sector companies.
"Nationalisation of banks, about 40 years ago, mandated that institutions for welfare should be entrusted with the government for public accountability. We have followed the policy for the last five years. Even with pressure, we have not opened up the banking sector entirely to the private sector, or market forces.
"The ownership of public sector banks has remained with the government, and will remain with the government. Even with the divestment policy, 51 per cent stake in banks, or even more, will remain with the government," said Mukherjee at a credit camp organised by United Bank of India in Murshidabad on Sunday.
The minister said at a time when banks in the US and Europe needed government support for survival, banks in India were strong enough to sustain on their own.
Advocating banking sector reforms, the Economic Survey recently suggested allowing the public to hold greater equity in public sector banks and aligning of voting rights in banks with equity holdings, apart from raising FDI limits.
At present, voting rights are capped at 10 per cent, irrespective of how much stake an investor holds in a bank.
The Survey also suggested passage of the Banking Regulation (Amendment) Bill, 2005.
"These high rates have now come in the way of cutting lending rates at a pace which is consistent with the current outlook on inflation and the need for stimulating demand," the Survey said. The gross non-performing assets of scheduled commercial banks as a proportion of total assets declined to 1.3 per cent against 1.5 per cent in the previous year.
S C Gupta, chairman and managing director, UBI, said the bank would come out with an initial public offering in the last quarter of the current financial year.
