The government would raise its holdings in state-run banks, in which it holds less than 55 per cent, to avoid diluting its majority stake when it decides to sell shares, a finance ministry official said.
The government owned 51-55 per cent as of June 30 in Oriental Bank of Commerce (OBC), Andhra Bank, Bank of Baroda, Dena Bank, and Vijaya Bank. The state would invest Rs 7,600 crore ($1.7 billion) in the lenders before March, R Gopalan, banking secretary, said in an October 4 interview in New Delhi.
“We will raise the stake in these banks to give them adequate cushion to raise money from markets at a later stage without diluting majority stake of the government,” he said.
The government will also invest capital in all state-run banks to ensure 8 per cent of so-called Tier-I capital by March. The amount of funds to be infused into banks and the method would be decided in January, said Gopalan.