Government is preparing for major changes in the banking sector, from increasing the FDI limit to considering privatization of two government banks.

The government is preparing for major banking reforms. Steps are being taken in this direction. CNBC-Awaaz’s Laxman Roy elaborates on this exclusive information, quoting sources as saying that the government’s next focus may be on banking reforms. Preparations for banking reforms are going on at the ground level. Discussions on this are going on between the Finance Ministry, Finance Department and RBI.

According to sources, a meeting on banking reforms is expected to be held in the Prime Minister’s Office (PMO) in the next few weeks. Two-three issues can be discussed in this meeting. Firstly, there could be a discussion on raising capital for public sector banks and increasing the limit of foreign direct investment (FDI) in these banks. There may be a consideration of increasing the FDI limit in government banks to more than 20%. This limit can be increased from 20% to 49%.

The Finance Minister has been continuously emphasizing the need for two-four big banks in the country. Now this initiative is expected to be implemented soon. Apart from this, the proposal for privatization of two public sector banks is also likely to be reconsidered. The government had announced this in the Budget 2021-22, but later this proposal was dropped. However, now it seems that the government is taking steps in this direction. Major changes are expected in the banking sector in the next few months. It is expected that the Finance Minister will give concrete indications in this regard while presenting the budget.