Plan panel seeks government stakes cut in state-run banks

April 2nd, 2008 - 10:09 pm ICT by admin  

A file-photo of Manmohan Singh

New Delhi, April 2 (IANS) A Planning Commission report on the services sector has favoured restricting the government’s share in public sector banks to 33 from 70 percent, and reiterated the suggestion to make Mumbai an international financial centre. The report of the high-level group on services sector (HLGSS) released Wednesday suggested reducing the government share “in a manner that minimizes dislocation or dissonance among various stakeholders”.

Accompanied by senior plan panel officials, Anwarul Hoda, who headed the group, submitted a copy of the report to Prime Minister Manmohan Singh.

The group included Infosys Technologies CEO Nandan Nilekani, ICICI CEO K.V. Kamath, Wipro chairman and CEO Azim Premji, and ITC Hotels managing director S.S.H. Rehman.

“The government would take note of the recommendations to further boost the growth in the services sector in general,” Hoda later told reporters.

“The government should do needful to implement the policy measures highlighted in a high-powered expert committee report on making Mumbai an international financial centre,” he said.

“The government should introduce a uniform stamp duty for the debt and security markets and reforms in the pension sector,” Hoda told reporters after Planning Commission Deputy Chairman Montek Singh Ahluwalia formally received and released the report.

The report referred to the M. Narasimham Committee on banking reforms, which submitted its recommendations in 1998 to then finance minister Yashwant Sinha.

“The Narasimham Committee had recommended that the minimum government ownership in the public sector banks should be reduced to 33 percent, and the banks should become board-managed companies,” the report says.

The report, while recommending various measures to streamline the finance sector, has also suggested permitting foreign investors to own larger share in insurance companies.

The report has recommended that all insurance products should be “de-tariffed subject to appropriate regulatory oversight”, which would encourage growth in the non-life sector.

The report has said that the electronic clearing system (ECS) should be available at more locations, and the real time gross settlement (RTGS) should be expanded by substantially increasing the number of bank branches able to process inward transactions and initiate outward transactions.

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