According to people with knowledge of the discussions, the government may form a panel to compile a new list of public sector banks that could be privatised. After state-owned lenders became profitable and their number was reduced as a result of multiple rounds of consolidation, the Centre intends to review its bank privatisation policy. Niti Aayog recommended to the disinvestment department in April 2021 that two state-run banks be privatised. There was supposedly a shortlist that included the Central Bank of India and the Indian Overseas Bank, but no choice was made.
According to a government official, “a new committee may be established to identify lenders for privatisation, including mid- and small-sized banks, and determine the quantum of the stake sale based on their performance, including their bad loan portfolio among other parameters.”
Members of the Reserve Bank of India (RBI), Niti Aayog, and the Department of Investment and Public Asset Management (DIPAM) may sit on the committee.
Also read, Now is the time for Adani to raise equity and Market Cred.
Govt panel puts priority on Banks Privatisation:
Bank privatisation is a top priority, but now that all are profitable, a new review is needed to determine which lender can be put up for sale based on demand from possible investors and other considerations, the source added. The 12 state-run’ smaller counterparts, notably Bank of Maharashtra and UCO Bank, are likely to be the focus of the privatisation project rather than their larger counterparts.
The government listed the Banking Laws (Amendment) Bill in 2021, but it has not yet been introduced in Parliament. In her 2021 Budget speech, Finance Minister Nirmala Sitharaman announced the privatisation of two state-run banks as part of the government’s disinvestment Programme. In order to ease the privatisation of the two state-run banks, the bill aimed to change the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 as well as incidental amendments to the Banking Regulation Act of 1949.
