Government will reduce the stake in public sector banks to 26%

Privatization: According to sources, in this amendment bill, the provisions of the Companies Act, 2013 will be replaced by the provisions of the Companies Act, 1956.

Sources said that if the government’s stake in public sector banks comes down to 26 per cent, then institutional and public investment will get a boost, which will lead to better earnings for the exchequer.

Privatization: The central government will hold at least 26 percent stake in those banks which are being considered for privatization. At present, the government is considering privatization of two banks. According to the Business Standard news, according to the Banking Companies (Acquisition and Transfer of Units) Act, 1970, the government will introduce the Banking Laws Bill 2021 in the next session of Parliament to eliminate legal hurdles related to banking. This will allow the government to reduce its stake in banks from 51 per cent to 26 per cent. At present, the government is mandated to hold 51 percent stake in public sector banks.

Government exchequer will earn well

According to sources, in this amendment bill, the provisions of the Companies Act, 2013 will be replaced by the provisions of the Companies Act, 1956.

Sources said that if the government’s stake in public sector banks comes down to 26 per cent, then institutional and public investment will get a boost, which will lead to better earnings for the exchequer.

He further said that this would help in meeting the privatization and disinvestment targets and reduce the dependence of banks on the government for capital.

What will be the new provisions in the bill, what will be the law for whom?

Sources said that the bill which will be introduced will also have new provisions related to disqualification of directors, it will also include terms and conditions related to the services of chairman, whole time director and board of directors.

Apart from this, new sections will be included in the law in this bill, which will make it mandatory for every director to disclose his interests in the company.

In order to protect the decision making of bank officials, a new provision will also be incorporated in the law to protect them for action taken in good faith.

According to sources, the government is considering privatization of Central Bank of India, Indian Overseas Bank, Bank of Maharashtra, Bank of India.

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