Bank privatization: Privatization of public sector banks may start by September. The government is preparing to remove the 20% cap on foreign ownership in PSU banks (PSBs) by amending the Banking Regulation Act. Two government officials have given this information with the condition of anonymity.
While there are efforts to introduce amendments in the ongoing budget session of Parliament, the cabinet approval for the changes may take some time. There is a possibility that the amendment may take place till the monsoon session. Sources say that the government aims to ensure privatization of at least one bank by September.
A bank will become private at the beginning of the next financial year
According to sources, the work on privatization of public sector banks (bank privatization 2022) is going on in full swing. Inter-ministerial consultations are in the final stages to decide the modalities. After the completion of the legislative process, the Group of Ministers on disinvestment will finalize the names of banks for privatization. The final process will be completed at the earliest so that the privatization of at least one bank can be completed by the beginning of the next financial year.
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Know what is the government’s plan?
Let us tell you that while presenting the budget for the current financial year, Finance Minister Nirmala Sitharaman announced that two state-owned banks will be privatized along with IDBI Bank in FY22. NITI Aayog has also shortlisted two PSU banks for privatization, however, they have not been named. Sitharaman had also said that an insurance company would be sold in the current financial year. However, these plans got delayed due to the pandemic. The government is also awaiting investors’ response on IDBI Bank to address any regulatory issues involved in the privatization of the two public sector banks. Consultations are on with the banking regulator to resolve regulatory issues.
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Officials with knowledge of the matter said that a panel of secretaries had selected Central Bank of India and Indian Overseas Bank as potential candidates for privatization. After the legislative process is complete, the names selected by the panel will be placed before the Group of Ministers for approval. Officials said Indian Overseas Bank and Central Bank of India are the two candidates who have been voted in favor of privatization, though Bank of Maharashtra has also been found to favor the exercise in the next year or so.