The Union Cabinet has approved the proposal for transfer of the Reserve Bank's stake in the National Housing Bank (NHB) to the government and the process is likely to be completed by March-end.
New Delhi: The Union Cabinet has approved the proposal for transfer of the Reserve Bank's stake in the National Housing Bank (NHB) to the government and the process is likely to be completed by March-end.
"The Cabinet has approved the amendment to the National Housing Bank Act, 1987, for transferring Reserve Bank of India's (RBI) stake in the NHB to government," NHB Chairman and Managing Director R V Verma told reporters.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, deliberated upon the proposal yesterday.
"The process of stake transfer would be over within two months," sources in the finance ministry said. At present, the NHB is wholly-owned by the Reserve Bank of India (RBI) with a paid-up capital of Rs 450 crore.
Verma said NHB is looking at increasing its capital base and would initiate discussion with the government soon.
"We expect another Rs 250 crore from the government. We will raise the issue with them," Verma said.
It is to be noted that the government has already acquired stake of State Bank of India and National Bank of Agriculture and Rural Development (NABARD) from RBI.
In 2007, the government acquired the 59.73 percent stake held by RBI in the country's largest bank, SBI, for Rs 35,531.33 crore. However, NABARD stake transfer happened in 2010.
It was the Narasimhan Committee that recommended the transfer of RBI's stake in State Bank of India, NABARD and NHB to the government to differentiate the central bank's role as the owner of banks and the sector regulator.
After getting ownership of NHB, the government would also have a greater say in the boards of these institutions and the flexibility to issue directions to meet its credit objectives for the priority sector.