The government is considering the option of diluting its stake in state-owned banks through public offers, a senior finance ministry official said on Tuesday.

The official said the government could adopt the National Thermal Power Corporation initial public offer model, wherein both the government and the company had sold their shares. 

"It is one of the options being considered," the official said when asked whether the government would offload part of its stake in public sector banks to raise resources.

"It is not a problem as long as the government's stake does not fall below 51 per cent."

The official said the NTPC IPO model was a "good option", where both the banks as well as the government could raise money.

Last month, the government had sold 5.25 per cent of its holding in NTPC, while the power generation company sold another 5.25 per cent stake by issue of fresh shares.

The government, which had a 100 per cent stake in NTPC, now has 89.5 per cent stake in the company after the IPO. The IPO for 865.83 million shares had mopped up Rs 53.68 billion at Rs 62 a share.

"We want to sell our stake in the public sector banks through a public offer since it will help large number of investors participate in the banking sector's growth story," the official said.

The official said a number of public sector banks had sought the government's approval for a public issue to raise resources to meet capital adequacy norms under Basel II.

Basel II norms, which come into effect 2006, offer a new set of standards to establish minimum capital requirements for banking organisations.