The Finance Ministry has asked the public sector banks to gradually reduce the government’s equity to 52 percent. Currently, some of the public sector banks have government’s holding beyond 75 percent.
The Ministry of Finance has authorized the Public Sector Banks to take necessary steps in bringing down the government equity based on the marketing conditions.
The decision to bring down the government’s equity to 52 percent was taken due to the following reasons:-
1. Dilution of the government’s stake will help banks to meet 25 percent public float norms set by the SEBI.
2. To align with the best corporate practices.
3. Encourage the banks to follow the prudential lending norms.
The Securities and Exchange Board of India (SEBI) was established under the provisions of the Securities and Exchange Board of India Act, 1992 on April 12, 1992. SEBI aims to protect the interests of investors in securities and to promote the development and regulate the securities market in the country.