The Budget is expected to focus on the financial sector in a big way. Sources close to the developments said the government was expected to outline its plan for raising the foreign direct investment in private banks to 74 per cent and sort out the voting rights issue, announce guidelines for mergers and acquisitions and a package for managerial autonomy for public sector banks.
Banking industry sources said the government might go ahead with its plan for lifting the 10 per cent cap on voting rights in private sector banks if it managed to convince all its constituents over the next fortnight.
The NDA government last year had notified the hike in FDI in private banks but the guidelines were never made public. The current government, in consultation with the Reserve Bank of India, has now finalised the norms and they are expected to be announced in the Budget.
This will give an opportunity to foreign banks to pick up a limited stake in an Indian entity and raise it gradually.
Bonanza for bankers
-
Voting rights: The RBI has its reservations, but the 10% cap on voting rights in private sector banks may be lifted if the govt manages to convince its alliance partners.
-
Mergers, acquisitions: The Budget may also spell out the tax benefit for M&As in the banking sector
- For the brass: A package for managerial autonomy for public sector banks is being considered
