NEW DELHI, Apr 29: The Finance Ministry is likely to finalise a draft bill for setting up a holding company, that will raise resources from the market to meet capital requirements of the public sector banks, by May-end.
The Ministry, sources said, has already carried out consultations for the proposal to set up a holding company for bank capitalisation.
“We are shaping the bill. It will be ready by May-end,” a source said, adding that the draft bill is not likely to be tabled in the ongoing Budget session of Parliament.
The Ministry, the source added, will seek approval of the Cabinet for the draft bill after conclusion of the Budget session, which ends on May 22.
In view of the huge capital requirement of the public sector banks to meet the Basel-III norms, Finance Minister Pranab Mukherjee in his Budget speech in March proposed to set up a holding company to fund PSU lenders.
In his Budget speech, Mukherjee had said that the government was examining the possibility of setting up a holding company for funding banks.
The government has repeatedly said it was committed to protect the financial health of state-owned banks and financial institutions.
According to estimates, the government would be required to pump Rs 2 lakh crore capital into the state-owned banks by 2020 to help them meet fund requirement and comply with the Basel-III capital adequacy norms.
For the current financial year 2012-13, the government has made a provision of Rs 15,888 crore for capitalisation of PSBs, regional rural banks and other financial institutions, including NABARD.
The government had infused more than Rs 20,000 crore in 2010-11 and Rs 12,000 crore in 2011-12 in various state-owned banks to help them maintain a capital adequacy ratio of more than 8 per cent. (PTI)