Finance Ministry (Image: PTI)
The sale of government stake in public sector undertaking (PSU) banks has been postponed to next financial year, a report citing sources said on August 2.
The disinvestment programme has been deferred as the Centre would require more time to seek the Parliament's nod on changes in the law that would clear the privatisation of the selected state-run banks, Bloomberg reported.
An official who spoke with the publication said the Finance Ministry has not finalised the modalities of the law which needs the assent of lawmakers. This leaves the government with an acute shortage of time to complete the privatisation process this year, the anonymous source was reported as saying.
While presenting the Union Budget 2021-22 in February this year, Finance Minister Nirmala Sitharaman had said that three PSU banks and one state-run general insurance company would be privatised this year.
"Other than IDBI Bank, we propose to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22," Sitharaman had said.
Notably, Moneycontrol had learnt from informed sources last month that the disinvestment cannot be completed in the current fiscal despite the Narendra Modi-led government remaining committed to the privatisation programme.
The government now plans to privatise the selected entities in FY 2022-23, an official had said.
“This process is about the privatisation of state-owned financial companies, a new territory in terms of policy and a reversal of bank nationalisation. Also, the finance minister has promised there will be no job losses as a result of privatisation. Framing the contours of the deal and finding a suitable buyer will take time,” the official said.
Sources confirmed that Central Bank of India and Indian Overseas Bank had been shortlisted for privatisation. The insurance company, as yet unidentified, could be one among National Insurance, United India Insurance and Oriental Insurance.
Additionally, the Centre is confident that the ambitious divestment target of Rs 1.75 lakh crore this financial year will be met through share sales in Air India, Bharat Petroleum, Shipping Corporation of India, Container Corporation of India, Pawan Hans, BEML, Neelachal Ispat Nigam Ltd., and IDBI Bank, as well as the listing of Life Insurance Corporation of India, which is expected to be the country’s largest initial public offering.