Banks have suggested reducing government's holding in public sector lenders to below 51 per cent, the finance ministry said on Saturday after 'Gyan Sangam', a two-day banking retreat.
Prime Minister Narendra Modi's administration in 2014 approved a plan to reduce the government's stake in state-run banks to up to 52 per cent to help them meet their capital needs.
The PSU lenders recorded the highest level of stressed loans at 12.9 per cent of their total advances in September 2014, while the same ratio for private sector banks was at 4.4 per cent, according to data released by the Reserve Bank of India (RBI).
The country's top bankers had gathered in Pune to discuss long-pending reforms vital to improving the health of ailing public sector banks.
Financial Services Secretary Hasmukh Adhia said the government will "positively" look at the recommendations by bankers.