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'Govt view on bank holding co structure after RBI comments'

Last Updated: Sunday, November 4, 2012 - 11:10

New Delhi: The Finance Ministry will take a final view on the structure of proposed holding company for public sector banks only after receiving RBI's comments which are expected by November 10, officials said.

"RBI has some concerns. They are examining it. Once we get the comments of RBI, then a final decision will be taken," official sources said.

"RBI's comments should come by the 10th (of November), let's see. Once RBI clears it, it should not take much time," sources said.

The central bank is looking into various aspects including equity structure, share-holding pattern and inter-linkages between banks, which may arise due to such a structure.

The 2012-13 Union Budget had proposed setting up of a financial holding company that would help raise resources to meet capital needs of state-owned banks.

RBI Governor D Subbarao had earlier said that Indian banks will require an additional capital of Rs 5 lakh crore to meet the new global banking norms, Basel III. The norms are to be implemented in a phased manner by banks by March 2018.

The government, which owns 70 percent of the banking system, alone will have to pump in Rs 90,000 crore equity to retain its shareholding in the Public Sector Banks (PSBs) at the current level to meet the norms.

Subbarao had said "fiscal constraints pose significant challenges" to the government to re-capitalise banks to help them meet the Basel III norms, but bringing down its holdings to below 51 percent can help tide over the problem.

The government may have to resort to direct infusion in public-sector banks for at least for one year or so, an RBI official had also said.

In 2012-13 Budget, the government reiterated its commitment to maintain 58 percent stake in state-run banks and announced Rs 15,888 crore capitalisation support to banks and financial institutions.


First Published: Sunday, November 4, 2012 - 11:10
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