Financial Services Secretary Rajiv Kumar has advised the PSBs to gradually bring down the government’s equity to 52 percent in the first phase. He added they have been given all the permission required for this purpose. It is for them to choose the right market timing for dilution of stakes, he said.

The State Bank of India (SBI) has already initiated step for Rs 20,000 crore share sale through qualified institutional placement (QIP). Post QIP, the government stake will be diluted from the existing 58.53 percent. Last month, shareholders of the bank approved the sale of shares to fund the business growth.

Many other banks are also planning to raise capital through some means or other, depending on the market condition. Some of the lenders like Syndicate Bank, Union Bank of India, Punjab National Bank, and Oriental Bank of Commerce among others have already issued or in process of issuing Employee Share Purchase Scheme (ESPS).

Kumar further said the government has also initiated the process for consolidation of Regional Rural Banks (RRBs) to better serve the needs of rural India. Recently, the Centre has amalgamated three RRBs -- Punjab Gramin Bank, Malwa Gramin Bank, and Sutlej Gramin Bank -- into a single RRB with effect from January 1.