The Government should bring down its stake in public sector banks (PSBs) to 33 per cent in the next three years as it plans to recapitalise banks to strengthen NPA-hit lenders, industry body CII said.
“Over the next 2-3 years, the Government could consider bringing down its stake in most PSBs to 33 per cent. It could retain a larger share in the State Bank of India in order to meet priority needs. The off-loading of stake may be in the form of preference shares instead of equity shares to maintain the majority voting rights with the Government with nil transference to the investors. On a more immediate basis the Government may consider going for public issue to dilute its stake to 52 per cent with the 33 per cent being a target over the next 3 years,” the industry body said in a statement.
Currently, PSBs are majorly owned by the Government with a minimum stake of 58 per cent which has now been relaxed to 52 per cent, it added. “However, many PSBs have a much higher Government equity holding at over 80 per cent, while only 4 have brought down the share to 58 per cent as of March 2017,” said CII.