The sources said the ministry had agreed with the RBI's views that at a time when the country had a high fiscal deficit, the move might not be appropriate.
The government is trying to send a signal it wants to stimulate the economy and the stock market.
In a recent communication to the bank chiefs, the ministry has said all such loans to the corporate sector can be sanctioned only after board approval and need to be backed by securities within six months of sanctioning, failing which the loan would need to be phased out.
It had asked govt banks to reduce these and certificates of deposits to a combined 15% of total deposits
Regulator may relax norms to help companies achieve 25% public float.
Lender to acquire 30% after existing shareholders divest stake
With shares of most companies listed this year slipping below their issue prices and two initial public offerings (IPOs) already withdrawn, the scenario has remained challenging for the primary market.
According to sources, the central bank is keen on such a scheme to attract foreign exchange, as the country's reserves have seen a depletion in the wake of a weakening domestic currency.
Ministry says capital infusion if loans extended only to productive sectors
High crude oil prices, which the central bank perceives as a risk to inflation, may limit the extent of rate cut to 25 basis points rather than 50 bps, economists said.
SBI keeps IDBI waiting for proposal to set up infra development fund
In January, banks had rejected SBI Caps' initial proposal on Air India's debt recast, which suggested converting a part of the carrier's debt into cumulative redeemable preference shares, with an eight per cent dividend.
UB Group Chairman Vijay Mallya has turned down suggestions from banks that he should give a personal guarantee as a precondition for additional funding to the cash-strapped Kingfisher Airlines.
The government must guarantee the entire loan and the interest rate, so that there is no additional provisioning requirement.
Air India's debt recast plan has hit a deadlock with both the national carrier and banks continuing to stick to their stand even as the regulator has disapproved providing dispensation, thus only compounding the problem.
A more proactive government and some level of fiscal discipline are needed to sustain the current rally, says Suresh Mahadevan, managing director and head of equities, UBS Securities (India).
Writes to govt for legal amendment, proposes committee that'll consult other sector regulators.
The finance ministry's ambitious plan to implement portability in savings accounts has not found favour with the Reserve Bank of India (RBI).
Prefer proposal for airline to float bonds guaranteed by govt.
According to the new takeover guidelines, if they buy 25 per cent or more, they will have to make an open offer for another 26 per cent.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances