Despite assurance by Finance Minister Pranab Mukherjee Monday that state-owned undertakings in the banking and insurance sectors will not be privatised, a leading bank employees union is still suspicious of the government's divestment plans.
“If one reads the Economic Survey tabled in parliament and hearing the finance minister’s budget speech, it is clear the government still considers divestment,” said C.H. Venkatachalam, general secretary of the All India Bank Employees Association (AIBEA).
Presenting the 2009-10 budget, Mukherjee said: “I must state clearly that public sector enterprises such as banks and insurance companies will remain in the public sector and will be given all support, including capital infusion, to grow and remain competitive.”
However, the rider that he added is what is irking AIBEA.
“The average public float in Indian listed companies is less than 15 percent. Deep non-manipulable markets require larger and diversified public shareholdings. This requirement should be uniformly applied to the private sector as well as listed public sector companies. I propose to raise, in a phased manner, the threshold for non-promoter public shareholding for all listed companies.”
According to Venkatachalam, the finance minister had talked of financial inclusion but was silent on expanding the branch network of banks.
“Without expansion of bank branches financial inclusion cannot happen,” he said.
Incidentally, Mukherjee said in his budget speech that banking network will be expanded to "unbankable" areas. Apparently, AIBEA is unimpressed.