Cabinet likely to take up issue of NHB stake transfer tomorrow

NEW DELHI: The Union Cabinet is likely to take up tomorrow the proposal for transfer of RBI's stake in National Housing Bank (NHB) to the government.

"The Cabinet will tomorrow discuss amendment to National Housing Bank Act, 1987, for transferring Reserve Bank of India's (RBI) stake in the NHB to government," sources said.

At present, the NHB is wholly-owned by RBI with a paid-up capital of Rs 450 crore.

The government had made Budget provision of Rs 450 crore in the last Budget for meeting the expenditure for acquiring RBI's holding in NHB.

It is to be noted that the government has already acquired stake of State Bank of India and National Bank of Agriculture and Rural Development (NABARD) from RBI.

In 2007, the government acquired the 59.73 per cent stake held by RBI in the country's largest bank, SBI, for Rs 35,531.33 crore. However, NABARD stake transfer happened in 2010.

It was the Narasimhan Committee that recommended the transfer of RBI's stake in State Bank of India, NABARD and NHB to the government to differentiate the central bank's role as the owner of banks and the sector regulator.

After getting ownership of NHB, the government would also have a greater say in the boards of these institutions and the flexibility to issue directions to meet its credit objectives for the priority sector.