New Delhi: The government is contemplating changes that would make it easier to reduce its stake in state-run banks, an important step for the prime minister. Narendra ModiA plan to close the credit flow in the economy.
The proposal – if approved – would allow the government to gradually reduce its stake in state-run lenders from 51% to 26% without loosening its hold on management appointments, the people said, as the deliberations came. are not private to be identified. ,
They would also ease the privatization of some identified lenders and allow foreign investors to buy large stakes in others without Parliament’s approval.
With the proposed amendments, the government is trying to reduce the dependence of government-run banks on frequent injections of government capital, while still maintaining their quasi-sovereign status in favor of depositors.
The move would undermine some of the policies India implemented in 1969, when the state nationalized its lenders to create banks that still control two-thirds of the region’s assets and most of its bad loans today. Huh.
Major Offers:
* Insert an enabling provision to expedite the process of Parliament’s approval for privatization after details have been agreed with the Reserve Bank of India
* Government stake reduced from 51% to a minimum of 26%; Companies Act governing private sector lenders will not have regulation
* Foreign stakeholders may be allowed to breach the 20% limit. Voting rights of a single shareholder will no longer be capped at 10%
People said that initial talks are still on and the details could change. He said the proposals would have to be studied and cleared by the cabinet before they are placed before the Parliament.
A finance ministry spokesperson could not be reached for comment.
Bank privatization can be dire in India, where unions still dominate, albeit not as powerful as it was decades ago.
According to the Press Trust of India report, thousands of employees of state-run banks continued their strike for the second day on Friday to protest against the government’s proposed privatization of banks.
Modi, however, is new to the success of the privatization of the country’s flagship carrier Air India, and is moving to list state insurer LIC, which is being compared with the Saudi Aramco IPO in its ambition, scope and scale.
The government can bet that once the worst-hit asset on the lenders’ books is bought by the recently established bad bank, investor appetite for state-run banks will improve.
The sector’s bad-loan ratio is projected to rise to 9.8% by March 2022 from 7.48% a year ago, hampering the disbursement of new loans to businesses.
The proposal – if approved – would allow the government to gradually reduce its stake in state-run lenders from 51% to 26% without loosening its hold on management appointments, the people said, as the deliberations came. are not private to be identified. ,
They would also ease the privatization of some identified lenders and allow foreign investors to buy large stakes in others without Parliament’s approval.
With the proposed amendments, the government is trying to reduce the dependence of government-run banks on frequent injections of government capital, while still maintaining their quasi-sovereign status in favor of depositors.
The move would undermine some of the policies India implemented in 1969, when the state nationalized its lenders to create banks that still control two-thirds of the region’s assets and most of its bad loans today. Huh.
Major Offers:
* Insert an enabling provision to expedite the process of Parliament’s approval for privatization after details have been agreed with the Reserve Bank of India
* Government stake reduced from 51% to a minimum of 26%; Companies Act governing private sector lenders will not have regulation
* Foreign stakeholders may be allowed to breach the 20% limit. Voting rights of a single shareholder will no longer be capped at 10%
People said that initial talks are still on and the details could change. He said the proposals would have to be studied and cleared by the cabinet before they are placed before the Parliament.
A finance ministry spokesperson could not be reached for comment.
Bank privatization can be dire in India, where unions still dominate, albeit not as powerful as it was decades ago.
According to the Press Trust of India report, thousands of employees of state-run banks continued their strike for the second day on Friday to protest against the government’s proposed privatization of banks.
Modi, however, is new to the success of the privatization of the country’s flagship carrier Air India, and is moving to list state insurer LIC, which is being compared with the Saudi Aramco IPO in its ambition, scope and scale.
The government can bet that once the worst-hit asset on the lenders’ books is bought by the recently established bad bank, investor appetite for state-run banks will improve.
The sector’s bad-loan ratio is projected to rise to 9.8% by March 2022 from 7.48% a year ago, hampering the disbursement of new loans to businesses.
,