Draft Cabinet note for govt stake dilution in SBI next month: Sandhu
Finance Ministry is likely to prepare draft cabinet note for government stake dilution in State Bank of India in August to enable it to raise capital for meeting Basel III norms.
New Delhi: Finance Ministry is likely to prepare draft cabinet note for government stake dilution in State Bank of India in August to enable it to raise capital for meeting Basel III norms.
"Next month after Parliament session is over," Financial Services Secretary G S Sandhu said in response to a query on when the draft cabinet note on SBI stake dilution was expected.
"We have not decided yet on SBI stake dilution. We are preparing the roadmap at the moment (raising of capital by all public sector banks)," he said here today.
The Department is currently assessing the capital requirement of all public sector banks and likely to finalise the time schedule in one month, he said.
Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet Basel III norms. For the current fiscal, the government has allocated Rs 11,200 crore for bank capitalisation.
SBI is country's largest bank and government holds 58.60 percent stake in it.
Earlier in January, SBI raised Rs 8,032 crore by selling 5.13 crore shares through qualified institutional placement (QIP).
SBI had raised over Rs 16,000 crore through a rights issue in 2008. As part of its contribution, the government issued bonds to the bank instead of cash.
Sandhu further said "my first priority is insurance bill which is before Parliament.
The proposal to raise FDI cap has been pending since 2008 when the previous UPA government came up with Insurance Laws (Amendment) Bill to hike foreign holding in insurance joint ventures to 49 percent from the existing 26 percent.
Finance Minister Arun Jaitley, in the Budget speech, said that "it is also proposed to take up the pending Insurance Laws (Amendment) Bill for consideration of Parliament.
"The insurance sector is investment starved. Several segments of insurance sector need expansion. The composite cap of the insurance sector is proposed to be increased to 49 percent from the current level of 26 percent...".
The move would help insurance firms to get the much needed capital from overseas partners.