Mumbai: The government will not dilute its stake in public sector banks below 51 per cent, finance minister P Chidambaram said in the Lok Sabha.

He said the government's stake in PSU banks would always be at least 51 per cent and the proposed acquisition of RBI's holding in SBI would not adversely affect the capital raising ability of the bank.

Chidambaram said the Narasimhan Committee had recommended in 1996 that it is inconsistent with the principles of effective supervision that the regulator is also an owner of a bank and this would require the central bank to divest its holding banks and financial institutions.

Following the committee's report, RBI had announced its intention to transfer its ownership of shares in the country's largest bank SBI, housing finance companies regulator NHB and NABARD. The RBI holds 100 per cent stake in NHB, over 57 per cent in SBI and 72 .50 per cent in NABARD, he said.

SBI, he said, has a comfortable capital adequacy ratio of 12.63 per cent as of September 30 this year, which is well above the minimum regulatory requirement of nine per cent.

SBI, the country's largest bank, has a number of avenues, irrespective of its ownership to strengthen its capital - raising fresh equity, issue of innovative perpetual debt instruments and various other instruments to shore up its Tier II capital, he said.