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Public sector banks need Rs 2.40 lakh crore equity to conform with Basel-III norms by 2018, according to Finance Minister Arun Jaitley.
"In order to meet this huge capital requirement, we need to raise additional resources to fulfil this obligation. A part of this fund would be mobilised through public offerings made to retail customers,'' Jaitley said as he presented his debut Union Budget in Parliament on Thursday.
Direct shareholding
"While preserving the public ownership, the capital of these banks would be raised by increasing the shareholding in a phased manner through sale of shares largely through retail common citizens in the country," he said in the Budget speech.
Hence, while the government would continue to hold majority shareholding, the citizens of India will also get direct shareholding in the bank which they currently hold indirectly.
The government would also examine the proposal to provide greater autonomy to the boards of banks, making them more accountable.
Financial inclusion mission
In other reforms, a Financial Inclusion Mission will be launched from Independence Day this year as a time-bound programme to provide all households in the country with banking services. Also, the Reserve Bank of India (RBI) would create a framework for licensing small banks, Jaitley added.
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