In a presentation to the country's PM, the RBI suggested to reduce govt's stake in PSU Banks to 26%, while providing their heads longer tenure such that they manage these organizations more professionally. Currently, government's holding in PSBs is over 50%.
In a meeting on Wednesday, PM Modi asked bankers to lend to bankable proposals and not be haunted by NPAs. "Bringing down the government's stake in public sector banks to allow them to be run more professionally was one of the things discussed," a person with knowledge of the matter told ET.
Also, it was suggested that the government retains major control of these banks, while reducing the stake might need fresh legislation.
However the centre says that it will maintain 52% stake in PSU Banks.
Furthermore, MDs and CEOs should have a tenure of 3 or 5 years and salary at par with private bank.
More importantly, it was recommended that managing directors and CEOs of state-owned banks should have a tenure of three or five years and remuneration should be on a part with private sector bank.
The publication cited a source familiar with the discussion as saying, "There were discussions around whether it was a good time to disinvest or should the government wait longer."