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Government to ready bank stake sale plan in two months

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The government will come out with a blueprint on disinvestment of public sector banks within two months to help banks raise capital to support long-term infrastructure funding. The stake sale will help the banks meet the Basel III requirements of Rs 240,000 crore of funds by 2019.

In a move to stoke a new life into the stalled infrastructure projects, the government is also planning to exempt statutory liquidity ratio (SLR) and cash reserve ratio (CRR) limits for such projects.

Banking and financial services secretary Gurdial Singh Sandhu said, "The banking sector which has to comply with Basel III norms by 2019 needs capital amounting Rs 240,000 crore in different phases, and thus the government has began the exercise to scale up disinvestments as currently its holdings in them are very high."

In addition, PSU banks' consolidation drive is also on the current year's agenda.

Officials told dna that at present the government is examining divestment proposals in two banks, which will be divested in the current fiscal, but did not divulge the names of the banks. In March this year, the former government had raised about Rs 8,400 crore through stake sale in Axis Bank and some others. It divested about 9% in Axis Bank to institutional investors for about Rs 5,000 crore.

"The projects in infrastructure sector languishing on account of funding crisis in past so many years would be in for execution with exempted SLR and CRR limits," Sandhu said.

According to the Economic Survey presented in the Lok Sabha last week, as many as 110 out of 239 central sector infrastructure projects costing Rs 1,000 crore or above individually are facing implementation delays. Steel, coal, power and petroleum projects have been delayed by up to 26 months.

Sandhu also disclosed that the government was at an advanced stage of talks to set up asset reconstruction companies for power and road sectors with utilities such as NTPC and National Highways Authority of India.

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