GOVT. MAY DISINVEST IN PSBs WITHOUT LOSING CONTROL

The Centre is considering the suggestion of the Prime Minister's Economic Advisory Council Chairman, Dr C. Rangarajan, to allow statutory organisations such as LIC, the Employees Provident Fund Organisation and GIC to infuse capital into public sector banks (PSBs) by buying a portion of the Government's holdings in these banks.


This amounts to disinvestment without the Government losing effective control in the PSBs. This is because the Government will only nominate those agencies, in which it has no intention of divesting, to buy its stake in PSBs.


For this, the Bank Nationalisation Act would have to be amended so that the definition of ‘Government' includes certain nominated quasi-Government agencies. PSBs will continue to be PSBs, except that the Government won't be holding 51 per cent. Currently, the Government's share in PSBs cannot fall below 51 per cent.


Source: http://www.thehindubusinessline.com/2010/02/02/stories/2010020252400100.htm