The government has decided to increase the public sector bank (PSB) contribution in New Pension Scheme (NPS) to 14% of the salary from the current 10%. The minimum employees’ contribution, however, will remain at 10%.

"PSBs’ contribution for employee pensions under NPS is being hiked to 14% from 10% earlier," said Secretary Department of Financial Services (DFS) secretary Debasish Panda.

The government on Wednesday also announced to raise family pension for bank employees to 30% of the last-drawn salary. Previously, the kin of a deceased PSB employee used to get a maximum of Rs 9,284 per month as a family pension.

"The cap has been completely removed and a uniform slab of 30% at the last-drawn salary will be entitled as family pension," Panda told reporters.

This would result in the family pensions rise to as high as Rs 30,000-Rs 35,000 a month, Panda added.

PSB employees' NPS rule will thus become at par with the central government employees pension under NPS. For central government employees pension under NPS, the government contribution is at 14% while employees' minimum contribution stands at 10%.

Panda said that since last year, the banks have collectively raised over Rs 69,000 crore, including Rs 10,000 crore in equity, and are in the process of raising another Rs 12,000 crore at present.

On the government's plans to reduce stakes in insurers, Sitharaman said the government will go down to having minimum holdings in such companies.

On whether the government was mulling insurance bonds as an alternative to bank guarantees, Sitharaman said it was just a suggestion that had come from the industry.