Centre may sell stake in Central Bank of India, Indian Overseas Bank in privatisation move

These banks were finalised for proposal out of belief that “better-off entities would attract greater interest”. Central Bank and IOB are together valued at nearly Rs 44,000 crore. (FIle Image of Central Bank building in Mumbai)

The Central government may sell its stakes in the Central Bank of India and Indian Overseas Bank (IOB) as part of its banks privatisation drive announced by Finance Minister Nirmala Sitharaman in the Union Budget 2021 in February.

The two banks have been recommended for divestment by the NITI Aayog, but another potential sell includes the Bank of India (BoI), sources told the Times of India.

Moneycontrol could not immediately verify the report.

The NITI Aayog had shortlisted six entities, not on the original list for merger a few years back - these included Central Bank, IOB, Bank of India, Bank of Maharashtra, Punjab & Sind Bank and UCO Bank.

The first two were finalised for proposal out of belief that “better-off entities would attract greater interest”. Central Bank and IOB are together valued at nearly Rs 44,000 crore.

NITI Aayog’s proposal is being “vetted” by the disinvestment and financial services departments of the Finance Ministry – in what is a “multi-stage process to finalise a list of entities to be taken up for privatisation”, the sources added.

Niti Aayog submits names of PSU banks to be privatised

As per the process, NITI Aayog recommends names, these are reviewed by the inter-ministerial group of officers and then by a group of ministers, before seeking approval from the Union Cabinet.

The proposal and legislative changes needed for privatisation of the banks will be examined by the Financial Services Department and the Department of Investment and Public Asset Management (DIPAM), as per sources from the latter.

They added that the timeline to complete the privatisation will depend on the legislative changes required. This will also have to be discussed with the Reserve Bank of India (RBI) as the central bank provides “special dispensation for state-run banks in several areas”.