Government to lower stake in PSU banks to 51%

In the quarter to December 2015 alone, nine state-owned banks have reported a combined loss of Rs 11,251 crore, with Bank of Baroda posting a quarterly net loss of Rs 3,342 crore on Saturday.

By: ENS Economic Bureau | Mumbai | Updated: February 15, 2016 8:35 am
arun jaitley, public banks, public sector banks, bad loan, public banks bad load, bad debt public banks, bank write offs, business news, economy news, india news Union Minister for Finance Arun Jaitley interacts with the media on the volatility of the share market in New Delhi on Friday. Shaktikanta Das, Secretary, Department of Revenue is also seen. (Source: PTI)

The government will soon announce a series of major banking reforms, including lowering its stake in state-owned banks to 51 per cent, Union Finance Minister Arun Jaitley said on Sunday.

“Public sector banks have played an important role in financial inclusion but at the same time, political government needs to maintain arm’s-length distance from these banks and allow them to have more professionalised bank boards. The banks will have to work on banking considerations,” said Jaitley at the CNN Asia Business Forum in Mumbai.

The Indian Express had highlighted in a series of reports how PSU banks had written off Rs 1.14 lakh crore over the last three years, and how a spike in loan write-offs and bad loans over the last two quarters prompted corrective action from the government and RBI.

Read | Full coverage of The Great Govt bank write-offs

In the quarter to December 2015 alone, nine state-owned banks have reported a combined loss of Rs 11,251 crore, with Bank of Baroda posting a quarterly net loss of Rs 3,342 crore on Saturday.

Apart from banking reforms, Jaitley also said that the government is trying to bring in more clarity on tax norms and resolve tax issues to give a “stable and predictable” tax regime.

“A lot has happened in the past that has given us a bad reputation. Unreasonable tax demands can never bring you revenue. We are, one by one, getting rid of all legacy issues. And I am glad to say that from retrospective taxation fears to some exaggerated demands, most of those fears have been addressed. Two problems still remain. We are trying to solve them,” said Jaitley.

The Finance Minister also said that the government is committed to bringing down direct corporate tax rates over the next four years. “As far as the in-direct tax is concerned, we do hope to negotiate GST in the days to come,” said Jaitley.

He said that the government is diverting the windfall from falling oil prices to infrastructure, railways and rural roads. “As far as development of demand is concerned we have seen that rural demand is lagging behind and we intend to strengthen rural infrastructure using the windfall,” said Jaitley, adding that the government will channelise savings in social sector and other developmental activities.

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  1. R
    Romik
    Feb 15, 2016 at 12:40 am
    Private large banks were the cause of the Disaster in the US stock market/economy. The reason was that they, through political lobbying, made laws to favor them. The w world economy crashed. There should be a healthy balance between Govt owned and Pvt banks with strict oversight ( from independant Lokayukta type body). There will be competetion and outcomes will be good.(Otherwise Private banks can covertly ally with each other and bend laws to maximize their profit and may hurt the economy).
    Reply
    1. T
      TIHAEwale
      Feb 15, 2016 at 5:46 am
      So now Arun will say PSB loots originated from 24 Akbar Road but even after 18 months in office will not tell why he could not send the concerned industrialists and bank officials who jointly looted because now the very same looters have shared booty with Arun and ociates
      Reply
      1. S
        sS
        Feb 15, 2016 at 12:33 am
        saab beach de
        Reply
        1. M
          mumbai
          Feb 15, 2016 at 6:26 am
          you are anti indian. no patriotism in your mind
          Reply
          1. A
            Anandan
            Feb 15, 2016 at 4:59 am
            pl say you want to sell public secor banks and make money That is all your interrst,
            Reply
            1. A
              ashok
              Feb 15, 2016 at 1:10 am
              Let's see whether jaitely can implement by bringing the stake below 51% in banks. He talks a lot but when it comes to action its zero
              Reply
              1. C
                chinna
                Feb 15, 2016 at 12:37 am
                Please watch this
                Reply
                1. A
                  ah
                  Feb 15, 2016 at 3:37 am
                  Western Cartels ............... don't think that INDIANS do not know ........................ REMEMBER ENRON ................. POLITICIANS can be bought , but there are NON POLITICAL enies ...... who know how to deal with TRAITORS who sell Motherland and Colonizers who want to RULE India again ..............................
                  Reply
                  1. K
                    kulaputra kulaputra
                    Feb 15, 2016 at 12:54 am
                    Really. The difference is that in private banks, greedy investors lose. In public banks, tax payers lose. Banking needs reforms. There is absolutely no need for Government to own banks. It should stick to regulation and do a good job of it.
                    Reply
                    1. K
                      kulaputra kulaputra
                      Feb 15, 2016 at 12:53 am
                      This wisdom is dawning on it today ? There is no action from Jaitley on retrospective taxes. Tax regime continues to be oppressive and regressive. Enough talk. Just do it and show.
                      Reply
                      1. R
                        Ramesh Kumar
                        Feb 15, 2016 at 2:46 am
                        Let the share be brought under 51%. Once it is done, bankers will have greater authority and freedom from government and government agencies and can perform better. Generally, the defaulters put a lot of pressure from bureaucrats and politicians in power on the bankers and manage the situations. This situation must go. It is not as if there will not be other difficulties. There will be incompetence, dishonesty and market forces that determine the performance. But these will be there even in private sector. So there will be a level playing ground for PSUs which are otherwise handicapped.
                        Reply
                        1. D
                          Deepak
                          Feb 15, 2016 at 2:25 am
                          Better delink Govt interference in Banks and writing off loans than selling off stakes in state-owned Banks that offer security to public money than trust Adanees and Ambanees
                          Reply
                          1. D
                            Deepak
                            Feb 15, 2016 at 2:25 am
                            Kaun karedega ? Adanee ya Ambanee
                            Reply
                            1. D
                              Deepak
                              Feb 15, 2016 at 2:22 am
                              Maximum Loot Minimum spent - New slogan of PeeJPee
                              Reply
                              1. P
                                Prabhu M
                                Feb 15, 2016 at 3:44 am
                                It is ok to reduce the stake to 51%, but who is going to invest? Please remember VSNL was divested with the condition, Government will have full control even if it holds 1 share. Will anybody invest huge sums without any control?
                                Reply
                                1. S
                                  shapoor bomanjee
                                  Feb 15, 2016 at 1:41 am
                                  Public should know where the money went. F M is quick in reducing interest rates, putting senior citizens to much difficulty, but when it comes to their very own banks, under their control, they take baby steps one at a time. Put up the names of all the defaulters on the net, so that people know who cheated how much and when.
                                  Reply
                                  1. T
                                    Thomas George
                                    Feb 15, 2016 at 2:28 am
                                    In reality, free trade is the reason for all the US woes. The unemployment in the USA is because jobs are exported to the the rest of the world by corporations who have politicians in their back pockets. It is funny; will we say that we don't want computers and mobile phones if we don't get software contracts from them? If the USA closes foreign trade today, they can survive. What will happen to us?
                                    Reply
                                    1. T
                                      Thomas George
                                      Feb 15, 2016 at 2:25 am
                                      Yes. It would have taken two minutes to reverse the retrospective tax law in Parliament, and bring a comprehensive prospective law. But, he does not want to do that.
                                      Reply
                                      1. I
                                        indian
                                        Feb 15, 2016 at 2:44 am
                                        reducing equity in public sector banks instead of investigating and punishing for the bad debts created by the banks is like putting the horse before the cart......privatizing banks in the long run is not the solution in the long run...........all the big banks in the bank are on the verge of collapse including Deutsche Bank (suffering record losses of €6.8 billion in 2015),.private banks have only one motive to keep profits above people, they will do anything to achieve that...........the people of india will end up becoming debt slaves to these banks if they are allowed..................
                                        Reply
                                        1. C
                                          Citizen
                                          Feb 15, 2016 at 2:16 am
                                          No living being what to comment shame on you IE Late Goenka would feel ashamed of you Jaihind
                                          Reply
                                          1. V
                                            vinci
                                            Feb 15, 2016 at 4:52 am
                                            When BJP government wants to do some good to the nation, thugs in the name of congress, cpi, rjd, jd(u), dmk, sp, bsp and tmc - all come together to show muscles to put the development plans down. This is India. No good or talented people are permitted to do their jobs but mafias, rowdies, terrorists and anti-nationals out numbered the good ones. How is it possible to achieve results with such lawless legacy of nehruvian-democracy.
                                            Reply
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