Feb. 25: Finance minister Jaswant Singh today said the government will reduce its equity stake in state-run banks but would not give up management control.
“We will reduce our holding from 51 per cent to 33 per cent,” Singh said during the question hour session in the Rajya Sabha.
“An amendment to the Banking Companies Act has been proposed,” Singh said. “This will allow nationalised banks to raise capital from the market without affecting the public sector character of the banks,” he added.
The 27 nationalised banks comprising the State Bank group (8) and 19 other banks which include Allahabad Bank and Vijaya Bank had reported a net profit of Rs 8,301 crore during the financial year 2001-02.
The finance minister also denied any move to privatise the state-run banks. “There is no proposal to privatise public sector banks,” Singh clarified.
Singh said the report on ‘Banking Companies (acquisition and transfer of undertakings) and financial institutions laws amendment Bill, 2000’ by the standing committee is still awaited. The Bill was introduced in the Lok Sabha in 2000.
For the fiscal 2001-02, total cumulative assets stood at Rs 7,06,228 crore (46 per cent of total bank assets of scheduled commercial banks) against Rs 6,26,987 crore during the corresponding financial 2000-01.
The Credit Rating Information Services of India (Crisil) today said that assets worth Rs 60,000 crore with the domestic banking system have the potential to be securitised.
As on March 31, 2002, while scheduled commercial banks in India had term loans of Rs 2,70,400 crore, the banks' gross non-performing assets (NPA) were reported to be over Rs 70,000 crore.
“Even if 10 per cent of the performing term loans and investments in non-government securities and 20 per cent of the non-performing assets are securitised, the potential volume would amount to a huge Rs 47,500 crore,” said Roopa Kudva, executive director of Crisil.