The Finance Ministry is finalising the draft Cabinet note on reducing Government stake in PSU banks to up to 52 per cent as part of recapitalisation drive.
In 2010, the then Cabinet had approved a proposal to keep the minimum shareholding of government to 58 per cent in the public sector banks in order to provide buffer for the future.
A draft note is now being finalised for taking blanket approval from the Cabinet to bring down government the minimum stake in state-owned banks from 58 per cent to up to 52 per cent as and when required. It would soon be circulated to different ministries for their feedback, sources said.
As per law, Government holding at any moment must not come below 51 per cent to maintain the public sector character of PSU banks. At present, Government shareholding in various banks varies between 56.26 per cent (Bank of Baroda) and 88.63 per cent (Central Bank of India).