RBI’s rate cut will provide policy support to real economy, says Jaitley

Union Finance Minister Arun Jaitley on Monday addressed the 68th Annual General Meeting of Indian Banks’ Association and cited the dire need of providing autonomy for banks. “Of course, they will be carrying-out the developmental agenda of the Government, but their administration has to be based purely on banking considerations” the Finance Minister Shri Jaitley added. “The Public Sector Banks (PSBs) have to be given a lot of independence”.

Speaking on various issues, Jaitley said the number of stalled projects has considerably declined and he was sure the the measure on anti-dumping duty on steel will provide some relief to both the domestic industry and banks battling NPAs.

“We are willing to look at all other changes including bringing down government equity to 52 per cent (in state-run banks), and therefore giving additional financial strength and teeth to the banking institutions themselves”, he said.

Among others, the government owns over 59 per cent stake in largest public sector lender SBI, while it has 76.5 per cent stake in IDBI Bank. The government has also professionalised the recruitments of top positions in the banks, he said.

“This is also the first time that the foreign portfolio investors can invest in state-governments backed securities, which was a demand raised by state governments for a long time”, Das said, adding that could translate into an inflow of Rs.51,000 crore.

He said that in the power sector, the problem is essentially of the discoms, who despite an increase in power generation and supply, are unable to bridge the last-mile gap. Very few States had carried-out power sector reforms and the situation would not improve unless the users were made to pay for the electricity consumed.