The amendments in Banking Regulations Act and Banking Law Act are likely in the upcoming monsoon session of the parliament. The amendments will be made to privatise two state-run banks, Central Bank of India and Indian Overseas Bank for divestment, a report by CNBC Awaaz stated.
“We have submitted the names (of PSU banks) to the Core Group of Secretaries on Disinvestment,” a NITI Aayog official was quoted as saying by the news agency PTI.
The government-owned think-tank was tasked to select two public sector banks and one general insurance company for the privatisation in Banking which was announced by Finance Minister Nirmala Sitharaman in the budget of 2021-22.
Explaining the reason behind privatisation, Finance Minister Nirmala Sitharaman had said that banks in the country needed to be bigger, just like the State Bank of India (SBI). “We need banks which are going to be able to scale up… We want banks that are going to be able to meet the aspirational needs of this country,” Sitharaman had said.
The government also has the plans to divest off LIC-controlled IDBI Bank. Last month, the Union Cabinet gave its nod for strategic disinvestment along with transfer of management control in IDBI Bank. The Union government of Life Insurance Corporation of India (LIC) together own over 94 per cent equity of IDBI Bank. LIC, the current promoter of IDBI Bank which also has its management control, owns a 49.21 per cent stake.
For the ongoing financial year, the government has laid out a budget-plan of Rs 1.75 Lakh Crore from stake sale in public sector companies and financial institutions which includes two banks (Central Bank of India and Indian Overseas Bank) and one insurance company.