More Stories

Informist, Wednesday, Jul 24, 2024

 

By Krity Ambey and Shubham Rana

 

NEW DELHI – The government's plan to privatise two public sector banks, announced by Finance Minister Nirmala Sitharaman three years ago, is completely off the table, a senior finance ministry official said.

 

"The government is not interested in bank privatisation any more," the official told Informist. Sitharaman, in her Budget speech for 2021-22 (Apr-Mar), had said that the government will privatise two public sector banks and one general insurance company, besides divesting part of its stake in IDBI Bank.

 

The government has to introduce a bill in Parliament to amend the Banking Act to pave the way for privatisation, but that is yet to happen and seems unlikely now, the official said. The bill was listed for introduction in the Winter Session of Parliament in 2022, but it was not taken up. 

 

"There is no movement on bank privatisation since the first announcement and there is also no intent to move on this front," the official said.

 

The government has also encountered an inordinate delay in getting the fit-and-proper report on interested investors from the Reserve Bank of India, which in turn forced the government to postpone IDBI Bank stake sale, which was supposed to prepare the roadmap for privatisation of state-owned banks in the future.

According to the official, the circumstances of public sector banks have also changed since 2021, which has pushed the government to re-think its privatisation plan. Public sector banks reported a cumulative profit of over 1.4 trln rupees in 2023-24, as compared to a profit of 318 bln rupees in 2020-21. Prior to 2020-21, state-owned banks had reported losses for five years. 

 

The Narendra Modi government carried out large state-owned bank mergers in its second term. The government in August 2019 announced a mega merger plan for 10 public sector banks. Effective Apr 1, 2020, Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank, Andhra Bank and Corporation Bank were merged into Union Bank of India, Syndicate Bank was merged with Canara Bank and Allahabad Bank was merged into Indian Bank.  End

 

Edited by Aditya Sakorkar

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.