The government may amend banking regulations in order to enable the formation of a holding company to own its shareholding in public sector banks and other financial service ventures of these banks. |
The move would retain the public sector character of these banks, as the holding company will be wholly owned by the government, finance ministry officials said. This company, in turn, will own a majority stake in the banks. |
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One way to bring about the required amendments in the Banking Regulation Act of 1949 could be an ordinance to this effect. The government can, of course, also introduce an amendment Bill in Parliament. |
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However, officials say that the latter process may take too long, delaying a decision on proposals like the one by the country's largest public sector lender, the State Bank of India, to float a holding company for its insurance and asset management businesses. |
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"The Ordinance route could be considered as there isn't enough time and too many Bills are already pending in Parliament," said an official. |
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On August 27, the Reserve Bank of India had come out with a discussion paper on holding companies in banking groups. The paper had suggested a model in which both the bank and non-bank subsidiaries of a banking group would be owned by a holding firm. |
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"We are likely to go by the RBI suggestion on the holding company structure for bank groups," the official added. |
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