21 June, 2021

On The Road To Nowhere

The government's decision to reduce its holding in public sector banks raises hackles on all sides

On The Road To Nowhere
Both shareholders and employees are stakeholders in the well-being of a company. But their interests can often be divergent. And this time, caught between these divergent interests was finance minister Yashwant Sinha, who was bound to displease one of the two sides. But on November 16, when the cabinet decided to reduce the government's holding in public sector banks, barring the State Bank of India (sbi) and its subsidiaries, to 33 per cent (without diluting control), Sinha and the rest of the cabinet managed to displease both sides and achieve nothing.

If anything, this was a decision that has come to typify this government: don't take the hard decisions when faced with any political opposition. According to the decision, while the government is willing to reduce its stake in public sector banks to 33 per cent, no other shareholder will be allowed to buy more than 1 per cent of a bank. The government shall also continue to appoint bank chairmen, executive directors and directors on their boards. "This is a half measure which doesn't change things much," says Rohit...

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