In the recently presented Union Budget 2021, Finance Minister Nirmala Sithraman had hinted about privatization of a few banks. The recent reports claim that the center has allegedly shortlisted around four mid-sized banks for potential privatization. It has been done under a push to sell state assets and to support government revenues.
The privatisation of the banking sector is politically risky as it is dominated by state-run behemoths with thousands of people being employed. The sudden move might put jobs at risk, but Prime Minister Narendra Modi’s administration is aiming to make the start with second-tier banks.
Reportedly, among the four banks on the shortlist is Bank Of Maharashtra, Bank Of India, Indian Overseas Bank, and Central Bank of India. The reports are yet to be confirmed by the center for the general public, thus one should wait for the same before panicking.
Furthermore, two of these banks will allegedly be selected for sale in the 2021-22 Financial Year. The fiscal year will begin in April 2021.
As of now, the government is aiming for mid-sized to small banks for its first round of privatisation. It will be done to test the waters before taking the leap. The reports also claim that the centre might allegedly also look at some of the country’s bigger banks.
The sources also state that the government will continue to hold the majority of stake in India’s largest lender State Bank of India (SBI). This is seen as a ‘strategic bank’ for implementing initiatives including the expansion of rural credit.
However, a finance ministry spokesperson has refused to comment on the scenario. The economists say that the sheer impact of the worldwide health crisis on the Indian economy is the driving force behind some bolder economic reforms.
The nation’s capital wants to change or repair its banking sector which is reeling under a heavy load of non-performing assets. This is likely to rise further once banks are given permission to categorise loans that hiked amid the lockdown.
The hearsay suggests that PM Narendra Modi allegedly wanted four banks to be put up for sale in the coming financial year. However, the officials warned him fearing the resistance from unions representing the employees.