Govt may consider cutting stake in state-run banks – Arun Jaitley

Jaitely said the government has also professionalised the recruitments of top positions in the banks. The combined debt of discoms is estimated to be more than Rs 3 lakh crores leading to acute financial stress in the banking sector. “It is becoming more systematic”, he said. The Finance Minister asserted that the number of stalled projects has decreased considerably.

He said that the savings through Direct Benefit Transfer has given the government fiscal space to address other issues in the economy. “Resolution of disputes with relation of contracts law will be passed by the end of the fiscal”, he said.

Distressed state power distribution companies (discoms) must make users pay for the power supplied, Finance Minister Arun Jaitley said on Monday.

“Public sector banks, in particular, have to be given a lot of independence and an arms-length distance from political decision making”, he said.

“We have come up with a recapitalisation programme for the next four years and hopefully this would induct capital strength into the banks and improve their capacity”, Jaitley said, adding that the Centre is also open to diluting its stake in these lenders to 52 per cent.

The minister said the government is making all efforts to give a final shape to the Banking Bureau so that all other personnel-related decision with regards to the banks can also be professionalized.

Jaitley said that power ministry is in the final stages giving effect to its discussions with each one of these states which would have to enter into a discussion and probably an agreement with the ministry and it’s only then the kind of relief being worked out be available to them. The government has asked the Justice AP Shah committee to look into grievances of PSU banks for alternatives in recruitment and how a level playing field can be created in the banking sector, he said. He cautioned that brick and mortar branches may lose some relevance in future with Internet-based channels emerging.

Earlier, Ms. Chanda Kocher, CEO, ICICI Bank spoke about the challenges being faced by the banking sector in the country.