India says no proposal to prevent PSBs from entering insurance

There were reports that the finance ministry might ask state-run banks, which are receiving fresh funds from the government, to exit non-core businesses like insurance

The Indian government on Wednesday said that it has no intention to prevent state-run or public sector banks (PSBs) from entering into non-core businesses like insurance and mutual funds, reports PTI.

"There is no issue at all. We have never asked and there is no thinking in the ministry," financial services secretary R Gopalan said, when asked if the government has issued a circular asking banks to desist from entering into non-core businesses.

There were reports that the finance ministry might ask state-run banks, which are receiving fresh funds from the government, to exit non-core businesses like insurance.

"The banks have to expand in various financial product activities so you cannot prevent them from getting into them," Mr Gopalan said.

There is some space available so there is nothing wrong in entering into those activities, he said.

Mr Gopalan said that the government will take a decision on infusing Rs16,500 crore in capital in public sector banks by the end of next month.

The government is expected to take a view on public sector banks' recapitalisation by April-end.

Last month, the government announced that it would provide Rs16,500 crore financial assistance to the 16 state-owned banks for shoring up their capital base.
 

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