The Lok Sabha election verdict came as a surprise after a raft of exit polls pointed to a sweeping majority for the Bharatiya Janata Party (BJP) and its allies. That the BJP will now have to rely more than expected on its partner parties is a source of worry in some quarters, given the country's history of unwieldy coalition regimes. It is hence understandable that what most bankers, among other sections of society, desire is a steady central government that would help execute crucial reforms.
“We expect that a stable government has the potential to work on reforms for the banking sector. The insolvency code is where we aim to make some changes. Hope we see something happening there,” said a senior official with a private sector lender.
Several senior bankers highlighted the need for more measures to be implemented in rehabilitating companies that are financially stressed. The Insolvency and Bankruptcy Code (IBC) came into being in 2016 and was termed as a much-needed and long-awaited reform. “IBC has helped in the recovery process for banks but there is space for more reforms,” another senior private sector banker had said earlier. That hinges on how much leeway the next government will have.
Also read: Results for all Lok Sabha constituencies declared; BJP wins 240 seats, Congress 99: EC
The poll outcome
The Election Commission of India has declared results for all Lok Sabha constituencies, with the BJP winning 240 seats and the Congress 99.
According to the final results, declared early on Wednesday, Prime Minister Narendra Modi is expected to form the government for a third consecutive term with the BJP-led National Democratic Alliance getting a majority of the seats in the Lok Sabha. However, with its seat tally having been trimmed, the BJP will be more reliant on its partners this time around.
More than 640 million votes were to be counted in the world's largest democratic exercise, conducted from April 19 to June 1 in seven phases.
Also read: Banking sector: IDBI Bank privatisation, IBC reforms may top next government’s agenda
Reforms in the banking sector
The other key step apart from an improved IBC that industry insiders expect is the completion of the stake sale in IDBI Bank. The government expects to complete the strategic sale of IDBI Bank in the next financial year, DIPAM or Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey told the media on February 4. He added that the process was on, and once regulatory clearances were obtained, financial bids would be invited.
The government and Life Insurance Corporation of India are selling an almost 61 percent stake in IDBI Bank. They invited bids from buyers in October 2022. In January 2023, DIPAM said it had received several expressions of interest for the IDBI Bank stake on offer. The process has been hanging fire since, and the hope is that the new government will put it back on track.
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