The Prime Minister's Economic Advisory Council (PMEAC) has suggested that government should reduce its stake in public sector banks to 51 per cent, which would help banks raise the additional capital required for complying with Basel-3 norms, according to a Business Standard report.
According to the report, the PMEAC also said that the divestment in banks would help government raise more than Rs 55,000 crore.
The council, chaired by C Rangarajan, also suggested that issuing new licences for banks should be an on-going process instead of this limited period offer. The council said central bank should give licence to an entity at any time, if it meets all the requirements. The move will help reduce the fiscal impact of Basel-3 as the public-sector banks' share in incremental credit creation can be brought down from the current 70 per cent.
The Business Standard report said that council also recommended measures to tackle the rising Non-Performing Assets (NPAs). It demanded quicker setting up of National Company Law Tribunal and a time-bound mechanism for dealing with NPAs.
Dion Global Solutions Ltd.