Govt to set up panel to prepare fresh list of state-run banks for privatisation

The privatisation programme is likely to be focused on the smaller of the 12 state-run banks

The government may set up a panel to prepare a fresh list of public sector banks that can be privatised and also revisit its bank privatisation strategy after state-owned lenders turned profitable and several rounds of consolidation reduced their number, the Economic Times reported.

Niti Aayog had reportedly recommended privatisation of the Central Bank of India and the Indian Overseas Bank to the disinvestment department in April 2021, but no final decision was taken.

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"A new committee may be set up to identify lenders for privatisation, which include mid- and small-sized banks, and determine the quantum of the stake sale based on their performance, including their bad loan portfolio among other parameters," an official told ET.

Moneycontrol could not independently verify the report.

The committee may include officials from the Department of Investment and Public Asset Management (DIPAM), the Reserve Bank of India (RBI) and Niti Aayog. "Bank privatisation is very much on the agenda but now all banks have turned profitable, so a reassessment is required as to which lender can be put on the block based on interest from potential investors and other such factors," the report quoted a government official.

The privatisation programme is likely to be focused on the smaller of the 12 state-run banks such as Bank of Maharashtra and UCO Bank and not on the bigger ones.

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 and the government listed the Banking Laws (Amendment) Bill 2021 in the same year, but it has not been introduced in Parliament so far. The Bill sought to make amendments to the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 and incidental amendments to the Banking Regulation Act of 1949 to facilitate the privatisation of the two state-run banks.