Mumbai, 20 July-2014(Indilens Web Team):The government is preparing itself for the draft report for stake sale of the largest public sector bank in the country, the State Bank of India. The bank needs to have an equity capital base of Rs 2.4 lakh crore by 2018 to meet the Basel III norms, the international standards by which banks world over are guided.
Government preparing draft cabinet note for State Bank of India stake sale
Financial Services secretary GS Sandhu told the Parliament that the time line was not clear, though the government was preparing a road map. It was assessing all the requirements of the banks and would prepare a timeline of the stake sale accordingly.
SBI had last raised Rs 8,032 crore by selling 5.13 crore shares through qualified institutional placement (QIP) which had brought down the government’s stake in the bank to 58.6%. Any further state sale will bring down the stake further.
However the government has allocated just around Rs 11000 crore for the banking sector this year, a sum that would clearly not be enough for the Indian banks for meeting international norms or their own expansion requirements. The government has set itself lofty disinvestment targets for the whole year riding on the positive sentiment in the market.
However the first concern of the government remains the passing of the insurance bill which Arun Jaitley had included as part of his annual budget. According to this the foreign direct investment in the sector would go up from 26 to 49%.