No proposal from SBI to lift cap on foreign holding

NEW DELHI, SEPT. 27. The Finance Minister, Mr. Yashwant Sinha, said today he had not received any proposal from State Bank of India to lift the 20 per cent cap on foreign holding in the country's largest commercial bank but said the government was not averse to considering such proposals.

``I have seen such reports but we have not received any such proposal from SBI. But if they come up with such suggestions, we will look into them," Mr. Sinha told reporters.

SBI has reportedly made such a proposal in the face of the Reseve Bank of India's decision to lift the cap on foreign institutional investor to make it on a par with the cap on foreign direct investment.

The largest commercial bank feels that it was at a severe disadvantage as compared to other banks and financial institutions as its entire foreign holding limit including FIIs and global depository receipts was capped at 20 per cent by law. If any changes were to be made, it has to be through amendment to law.

Regarding the budgetary proposal to allow public sector banks to reduce Government equity to 33 per cent, Mr. Sinha said the Government had already brought in legislation in Parliament and it was now being considered by the Standing Committee.

Mr. Sinha admitted that the country's leading financial institution Industrial Development Bank of India was in "some difficulty" but it was not as though it would have problems in the next six months or so.

IDBI being a major financial institution had a large exposure in the old economy, which was passing through a recessionary phase.

He said the new IDBI Chairman, Mr. P.P. Vora, was seized of the matter and recently he had a meeting with the Finance Secretary, Mr. Ajit Kumar.

IDBI would have to infuse about Rs. 200 crores in IFCI, while State financial corporations have also asked for Rs. 450 crore capital injection as suggested by the G. P. Gupta Committee.

Referring to IFCI, Mr. Sinha said the Government had already cleared the Rs. 1,000 crore package and clarified that the budgetary support in it was only Rs. 400 crores.

- PTI

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Section  : Business
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