Now preparations are on to convert many more government banks into private banks.Image Credit source: Representative Photo
Finance Minister Nirmala Sitharaman had announced in her 2021 budget speech to hand over two public sector banks to private hands. But in the market recovering from the post-Covid situation, this thing got blown up and not much happened regarding the privatization of banks. Meanwhile, almost all government banks started earning profit and now the government is trying to make a new list of banks worth privatization.
The Modi government at the Center has adopted the path of merger and disinvestment to rejuvenate the public sector banks in the country. The first 10 public sector banks in the country were merged to form 4 big banks. Now the government may soon constitute a committee which will review the bank privatization policy and prepare a new list.
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Focus on privatizing small banks
In April 2021, NITI Aayog had recommended to privatize two public sector banks. The possibility was expressed that the government may hand over the Central Bank of India and Indian Overseas Bank to private hands. But no final decision could be taken.
According to media reports quoting a government official, the focus of the government’s new committee may suggest privatization of medium and small banks instead of big banks. The government’s stake in banks will be sold on the basis of their performance, bad loans and other parameters.
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Officials from the Department of Investment and Public Asset Management (DIPAM), NITI Aayog and Reserve Bank of India can be included in this new committee. Recently, the balance sheet of most public sector banks has become profitable. That’s why the government is focusing on making a new list of banks that can be privatised.
The number of these banks can be found
It has been told in the news that the government can focus on privatization of small banks like Bank of Maharashtra, Punjab and Sindh Bank, Indian Overseas Bank, Central Bank of India and UCO Bank. Apart from this, the process of privatizing IDBI Bank is going on at present.
In the financial year 2022-23, the profit of all public sector banks can reach up to one lakh crore rupees. On the other hand, in the last one year, the Nifty PSU Bank Index of public sector banks has registered a growth of 65.4 percent. While the growth of Nifty 50 has been only 16 percent. There are a total of 12 public sector banks in the country.