(Bloomberg) -- India is considering selling controlling stakes in some of the smaller state-run banks in a bid to raise funds to boost spending on programs for the poor, people with knowledge of the matter said.
The proposal being considered involves offering a majority stake in some of the weaker banks and use the proceeds to fund Prime Minister Narendra Modi's rural housing program, the people said, asking not to be identified as the proposal is at an early stage. The details are still being worked out and, if approved, it could be included in the budget to be unveiled on July 5, the people said.
Modi's administration is under pressure to raise spending on welfare programs and revive growth after a resounding mandate in the recently concluded elections. If the plan is finalized, the government will need to amend a law to enable it to sell majority control in state-run banks, the people said.
Two calls made to Finance Ministry spokesman D.S. Malik remained unanswered. India's central bank and the government is in the midst of cleaning up a banking system saddled with the world's worst non-performing loan ratio.
To contact the reporter on this story: Siddhartha Singh in New Delhi at ssingh283@bloomberg.net
To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Unni Krishnan
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