NEW DELHI (Reuters) - The government is considering a plan to reduce stakes in state-run banks to 52 percent that could enable it to raise about 891.2 billion rupees ($14.39 billion), Jayant Sinha, junior finance minister told lawmakers on Friday.
The government holds stakes ranging from 56 percent to 84 percent in the state-run banks that account for 70 percent of India's total outstanding loans of about $1 trillion.
"The reduction of government of India share in equity capital of PSBs (public sector banks) to 52 percent will enable mobilisation of about 891.20 billion rupees," Sinha said in a written statement.
He said the stake sale will enable the government to scale back its budgetary support for the banks.
India's 26 state-run banks, which include State Bank of India, Bank of Baroda need as much as $60 billion in new capital over the next few years to meet upcoming global regulations and to build a buffer against rising bad loans.
According to the central bank's estimates, the government would need to inject as much as 2.4 trillion rupees into state-owned banks by end March 2019 to meet capital requirements including Basel III, provisioning for asset quality, and additional risks.
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Officials in the finance ministry say the federal cabinet headed by Prime Minister Narendra Modi is expected to take a final decision on the issue of stake sale soon.
Finance Minister Arun Jaitley, who is concerned about mounting bad assets of the state-run banks - estimated at 2.16 trillion rupees at the end of previous fiscal year - has promised to take steps to improve their performance.
(1 US dollar = 61.9200 rupees)
(Reporting by Manoj Kumar; Editing by Sanjeev Miglani)