New Delhi: Government is contemplating new initiatives to bring substantive changes in the banking sector and public sector banks are seriously evaluating consolidation as one of the strategies to increase competitiveness, Finance Minister P Chidambaram informed the Lok Sabha today (Dec 15, 2004).

Making a statement on a calling attention notice by Gurudas Dasgupta, CPI (Communist Party of India), he also stated that revision of Foreign Direct Investment (FDI) limit in private sector banks would create an enabling environment for higher FDI inflows.

This would also result in infusion of new technology and management practices resulting in enhanced competitiveness, he said.

In order to regulate the flow of FDI and set out the roadmap for this purpose, the Reserve Bank of India has placed in the public domain draft guidelines in July this year and was in the process of considering suggestions and feedback received, he said.

"All the changes in the banking policy are being contemplated to strengthen the banking sector in India for the benefit of customers and preserve their trust in the banking industry," he said.

Dasgupta's notice was regarding the "situation arising out of the move of the Government to change the banking policy, dilute the Government stake in public sector banks, merge the public sector banks to form giant banks and enhance FDI limit in private to the detriment of interests of the common people".