Banking sector roadmap by next week:FM

The Finance Minister P Chidambaram said today that banking reform roadmap allowing foreign banks to pick up to 74% equity in Indian private banks was being "finetuned" and would be announced early next week.

"RBI Governor Y.V. Reddy has come for this purpose. It is being finetuned. We are dotting the i's and crossing the t's," FM said after a two-hour long meeting with Reddy.

Reddy later had a meeting with economic affairs secretary Rakesh Mohan to go into the fine prints of the roadmap. The roadmap would be unveiled on Monday or Tuesday after approval from Prime Minister Manmohan Singh, Chidambaram said.

Presently foreign banks are allowed to pick up equity in Indian private banks up to 49%. Though the government had announced in May last that the FDI cap would be raised to 74%, the guidelines had not been worked out as yet.

The roadmap will effect far-reaching reforms in the banking sector as many of the private banks are tottering.

The RBI had circulated draft guidelines for this purpose in July last.

The roadmap is likely to include guidelines for consolidation of public sector banks (PSBs); a few of them have already indicated their plans for mergers in the next few months. The banking sector is crowded with nearly 100 state, private and foreign banks, besides over 200 regional rural banks.

The UPA government is committed to creating a financial sector which could foster 8% GDP growth and the roadmap is one for the steps towards that.

The Finance Minister had promised to announce the roadmap before December end, but it got delayed slightly because of Tsunami.