Government May Set Up New Panel For Privatisation Of Public Banks

The government may revisit its bank privatisation strategy and form a new panel to choose public sector banks for privatisation.

What Happened? The government is keen to reevaluate its bank privatisation plan after state-owned lenders turned profits and their number shrank due to multiple rounds of consolidation, sources told the Economic Times.

In April 2021, the Niti Aayog had proposed the names of two state-run banks for privatisation to the disinvestment department. The Central Bank of India and the Indian Overseas Bank were reported to be the banks on the chopping board, but no final decision was made.

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Smaller Lenders Under The Microscope: The committee may include officials from the Department of Investment and Public Asset Management (DIPAM), the Reserve Bank of India (RBI), and Niti Aayog.

The privatisation programme is likely to aim at the smaller of the 12 state-run banks such as Bank of Maharashtra and UCO Bank rather than larger lenders, such as State Bank of India, Punjab National Bank, and Bank of Baroda, the official told the daily.

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In the past year, the Nifty PSU Bank Index has increased 65.4% against a 16% rise in the Nifty 50.

Finance Minister Nirmala Sitharaman had announced the privatisation of two state-run banks as part of the government's disinvestment programme in her 2021 budget speech.

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Posted In: EquitiesGovernmentRegulationsMarketsCentral Bank Of IndiaIndian Overseas BankState Bank of India