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According to reports, the cabinet secretary held a meeting with the high level panel regarding the privatization of the two public sector banks. The meeting was held to discard various regulatory and administrative issue so that the proposal could be placed before the group of ministers on disinvestment or Alternative Mechanism (AM) for approval.
Following, the Finance Minister Nirmala Sitharaman’s announcement in her 2021 budget speech, the NITI Aayog has put forward a couple of banks name for privatization to the Core Group of Secretaries on Disinvestment led by the Cabinet Secretary in April, sources revealed.
According to sources, on June 24, Thursday the meeting with the high level panel was on reviewing the recommendation placed by NITI Aayog. After settling the loose ends, the panel would send the names of shortlisted PSU banks to AM for consideration.
The members of the panel, headed by the cabinet secretary involved secretaries in the departments of Economic Affairs, Revenue, Expenditure, Corporate Affairs and Legal Affairs along with secretary of administrative department. The panel also includes Department of Public Enterprises, Department of investment and Public Asset Management (DIPAM) secretary as its member.
As per the sources, the panel also evaluated the issues pertaining to the protection of interest of workers of banks that are expected to be privatized.
After the clearance from AM, it will move to the Union Cabinet led by the Prime Minister for the ultimate nod. As far as the reports are concerned, changes on the regulatory side to facilitate privatization would commence after the cabinet approval. Reportedly, Central Bank of India and Indian Overseas Bank are the probable candidates for privatization.
During the ongoing financial year, the government has estimated nearly Rs 1.75 lakh crore from the stake sale in the public sector companies along with financial institutions that includes two PSU banks and one insurance company. The estimated amount is less than the record budgeted Rs 2.10 lakh crore to be obtained from CPSE disinvestment in the past fiscal.
Finance Minister, Nirmala Sitharaman in her budget speech on February 1 has disclosed that the government aims to take up the privatization of two public sector banks and one general insurance company in the year 2021-22. She stated, “Other than IDBI Bank, we propose to take up the privatization of two public sector banks and one general insurance company in the year 2021-22.”
The government in the previous year merged ten public sector banks into four that resulted a total number of PSBs to 12 from 27 in March 2017. In the past four years, the government have merged 14 public sector banks, as per reports.
In April 2020, the government initiated the biggest consolidation exercise in the public sector banking space when six PSU lenders were merged into four to make them globally competitive.